E-commerce major Flipkart, which has seen continuous churn at the top level for the last few quarters, is quietly working to revamp its senior leadership team by bringing back old hands. At least half-a-dozen senior executives have returned to the company in the last few months. Flipkart COO Mr. Nitin Seth, who also oversees the human resources (HR) function, said that the company has rehired many senior employees as part of a well-thought-out plan. “It was a conscious strategy—we want to bring back the DNA,” he said. Over the last one year, the company has had to change its CEO twice in the face of heightened competition from Amazon, successive markdowns by investors that slashed its valuation to almost a third of its $15.2-billion peak and a couple of failed funding talks. Not only have all non-founder CXOs quit the company, but several executives from the second layer, including senior vice presidents and vice presidents, have also left. Amid this churn, however, some of the old hands are returning. And this focus on rehiring former employees coincides with the return of former interim CFO Mr. Kalyan Krishnamurthy, who is leading efforts to put the company back on track. Among those who have come back over the past year are Mr. Lokesh Rajpal, who returned in August 2016, after a brief stint outside, to handle key functions at the legal department, and Mr. Nishit Garg, who had moved to Flipkart’s main investor Tiger Global nearly two years ago. Mr. Garg, who has recently joined back, is Mr. Kalyan’s chief of staff at Flipkart—the duo worked together at Tiger and, prior to that, at Flipkart. Similarly, Mr. Nitin Rajput, who joined Flipkart after it acquired his venture, Bollywood content company Chakpak, is back after working on his own startups for a little over two years. Earlier this month, Mr. Manish Kumar returned to the company as vice president, business development after a year-and-a-half.
The crisis at Gurgaon-based Snapdeal’s crisis has now spread to its technology department in Bangalore. According to multiple sources, the online marketplace is ramping down its engineering centre in Bangalore. “About 200 people in the engineering centre in Bangalore will be impacted due to the downsizing across teams. The product engineering team has already been impacted,” a senior company source said. It’s pertinent to note that Snapdeal had made lots of efforts in last few years to ramp up its Bangalore team. According to a source privy to the developments, Snapdeal is expected to let go off about 500 employees from the overall technology team spread across Bengaluru and Gurgaon. In 2015, the company had launched a 4 hour delivery service called Snapdeal Instant. The small 15-member team at Snapdeal Instant will also be impacted, sources quoted above said. The crisis at Snapdeal has been triggered by the fact that one of the major investors in the company had pulled out last year from investing a follow on round, as the company is yet to show any path to profitability. The company has been struggling against its bigger rivals Amazon and Flipkart and demonetisation had a double whammy on its business.
With hundreds of employees being handed out pink slips by companies such as Snapdeal and Stayzilla, rival e-commerce firm Paytm is walking into the ring by offering generous job offers to laid-off staffers. Paytm founder and CEO Mr. Vijay Shekhar Sharma tweeted: “Hello, Tech/Product people in Delhi NCR, feeling heat of business restructuring? We welcome you @Paytm and @Paytm-Mall with open arms.” While the tweet did not mention any names, it may be noted that last week Softbank-backed e-commerce firm Snapdeal announced laying off 500-600 employees across verticals while homestay-booking platform Stayzilla shut shop. Snapdeal co-founder Mr. Kunal Bahl admitted to having made mistakes in growing much before it could figure out the right economic model. Struggling to raise fresh capital, Snapdeal will stop all non-core activities, reduce costs drastically and cut down staff strength to turn profitable. Similarly, the Chennai-based online hotel room aggregator Stayzilla also decided to wrap up operations because of intense competition in the market. On the other hand, mobile wallet firm Paytm has seen a significant growth in business after the government’s move to demonetise high-denomination notes. The company, which is slated to launch its payments bank soon, is hiring aggressively across its areas.
Chinese automobile company SAIC Motor has started hiring executives for its planned foray into the Indian markets. Even as Chinese companies have been sellers of everything from toys to electronics in India, SAIC will be the first Chinese company to enter the automobile space. SAIC will sell in the Indian markets through its local unit – MG Motor India, a British brand which it had acquired from another Chinese firm Nanjing Automobile almost a decade ago. The cars sold here will be tagged under the MG Motor brand, which has been registered in India. Former India head of General Motors, Mr. Rajeev Chhaba, is slated to be the CEO, while seven others have been hired to lead the finance, human resources, purchase, IT and other departments. SAIC also has the Competition Commission of India’s approval to acquire the Halol (Gujarat) factory of General Motors, which is SAIC’s China partner. But the deal will depend on settlement of labour issues at the plant by GM. If GM is able to settle the labour issues by mid-next month, the Chinese company will be set to take over the plant as early as in April. If things settle as planned, the company should be able to roll out its first vehicle from the plant late next year or early 2019. However, experts point out it may not be a smooth sail for the company, primarily due to apprehensions on quality and safety. The issue is magnified by the fact that other major global automakers such as Volkswagen, Fiat, Ford Motor and GM have not been able to establish a foothold here even after a decade of existence in the country. But they also note, quality products at cheaper rates can dent existing markets. SAIC has hired KPMG to conduct the market study, while PwC has undertaken a study on the cost of the GM plant. It has also roped in EY to help it finalise suppliers. The immediate hurdle to start operations are labour issues at the GM plant.
Deutsche Bank AG cut its 2016 bonus pool by almost 80%, a figure unmatched in the bank’s recent history as it tries to recover from legal expenses that wiped out profit and eroded capital levels. The lender is reducing payouts with an eye toward shareholders and is aware it will be “frustrating” for employees, chief administrative officer Mr. Karl von Rohr said in an interview. The measures will affect about a quarter of the 100,000 staff. Though Deutsche Bank told staff last month that it was scaling back bonuses, the full magnitude of the cuts hadn’t been reported. The firm, which operates Europe’s biggest investment bank, saw its shares sink 23% last year amid rising misconduct costs and concerns about its financial strength. In an effort to bolster profitability and build its capital buffer, chief executive officer Mr. John Cryan has eliminated jobs, suspended dividends and sold risky assets. Mr. Philipp Haessler, an analyst at Equinet Bank AG in Frankfurt, said the reduction of almost 80% is more than he anticipated. Deutsche Bank’s wider compensation expenses fell 11% to €11.9 billion ($12.6 billion) last year from a year earlier, company filings show. “Investors will be happy to see that costs go down, but the question is, will the best people want to leave or are there no jobs out there for them?” said Mr. Haessler, who has a buy recommendation on the shares. “It’d be great if this helped keep personnel costs lower, but I’m sceptical on that given Deutsche Bank’s track record.”
The much-hyped re-entry of Public Sector Undertakings (PSUs) at the placement season of the Indian Institutes of Technology (IITs) doesn’t seem to have helped the students a lot. While most IITs were promised job offers by 6 to 10 PSUs, half or even fewer showed up for the first phase of interviews and formed a share of 1-3% of the total jobs offered across all IITs. At IIT-Bombay, six PSUs had registered for placements but only three came to the campus in the first phase conducted from December 1 -18, 2016. “Fifteen jobs were offered by PSUs and the profiles included core engineering as well as Research and Development roles,” said Professor Tom Matthew, placement in-charge, IIT-B. A total of 1,013 students were placed in the first phase at IIT-B, out of which only 15 jobs came from PSUs including Indian Space Research Organisation (ISRO) and Oil and Natural Gas Corporation (ONGC). While PSUs have hired freshers out of IITs and IIMs for a long time, a temporary stay on this process was put in place by the Madras High Court following a petition filed in 2014 seeking a ban on public sector companies opting for campus placements at private institutes and eating into chances of students from other government institutes vying for the same jobs. The ban was finally lifted in December 2015, giving private institutes a free hand to approach more companies. Most IITs were looking forward to the re-entry of PSUs, and were expecting more job offers as well as better pay packages, but the companies fell short of students’ expectations. At IIT-Hyderabad, only four PSUs showed up in the first phase of placement. “These companies offered about 20 jobs for profiles including scientist, management trainee, engineer, etc. The salary packages ranged from Rs 5-7 lakh per annum (plus perks and bonus),” said Professor Pradeep Kumar Yemula, placement head, IIT-H. At IIT-Delhi as well, just about 1% of the total job offers made in the first phase were offered by PSUs. IIT-Madras, however, saw better participation by PSUs with Indian Navy, ISRO and ONGC conducting interviews before the placement season started, as well as Coal India, Bharat Electronics (BEL) and Centre for Development of Advanced Computing (CDAC) showing up. The job offers made, however, were few compared to the overall figures.
US President Mr. Donald Trump pushed for a merit-based immigration system that could benefit high-tech professionals from countries like India. Mr. Trump, during his first address to Congress, noted that “nations around the world, like Canada, Australia and many others have a merit-based immigration system”. He said that such a system will save countless dollars and raise workers’ wages. Mr. Trump introduced the idea of a merit-based immigration system after invoking the memory and words of late President Mr. Abraham Lincoln, saying, “Lincoln was right — and it is time we heeded his words.” “Switching away from this current system of lower-skilled immigration, and instead adopting a merit-based system, will have many benefits: it will save countless dollars, raise workers’ wages, and help struggling families –- including immigrant families –- enter the middle class,” Mr. Trump said. He said he is going to bring back millions of jobs. “Protecting our workers also means reforming our system of legal immigration. The current, outdated system depresses wages for our poorest workers, and puts great pressure on taxpayers,” he said. Mr. Trump said he believes that real and positive immigration reform is possible as long as it focuses on the goals to improve jobs and wages for Americans to strengthen the country’s security and to restore respect for laws. “If we are guided by the well-being of American citizens then I believe Republicans and Democrats can work together to achieve an outcome that has eluded our country for decades,” he said. Indian IT professionals account for the largest number of foreign nationals coming to the US on H-1B visas. Indians also account for a significantly large number of foreign workers coming to the US as scientists, doctors, engineers and other highly-skilled professionals.
Uber Technologies Inc. executive Mr. Amit Singhal resigned after the ride-hailing company learned of a sexual harassment allegation from his previous job at Google. Mr. Singhal stepped down just a month after joining Uber as senior vice president of engineering, where he oversaw software development, the company said. After he started on Jan. 20, Uber became aware of an investigation at Google into a sexual harassment allegation that Mr. Singhal didn’t disclose and that wasn’t discovered during the hiring process, said people familiar with the matter. Mr. Singhal denied the allegation. “Harassment is unacceptable in any setting,” he said in an e-mailed statement. “I certainly want everyone to know that I do not condone and have not committed such behaviour. In my 20-year career, I’ve never been accused of anything like this before, and the decision to leave Google was my own.” Mr. Travis Kalanick, Uber’s chief executive officer, asked for Mr. Singhal’s resignation. Uber declined to comment further. Google also declined to comment. Mr. Singhal was head of search technology at Alphabet Inc.’s Google, a high-profile role running development of one of the world’s most profitable products. He left last year after 15 years with the company. At the time, Google said Mr. Singhal was retiring. In meetings with Google’s CEO and head of human resources in late 2015, Mr. Singhal disputed a sexual harassment complaint made by a female employee. Uber hired Mr. Singhal amid a deepening rivalry with Google’s parent company over self-driving cars, mapping data and ride-hailing software.
Snapdeal’s recent announcement of lay-off of its employees, in a bid to churn profits could just be the beginning of more job cuts, which is to follow in the e-commerce sector. Industry professionals and experts say more companies will get leaner in the coming months, as the sector is running entirely on an unsustainable model of cash burn. While the intent was to create a convenient digital alternative for the offline market, e-commerce in India has turned its focus entirely on discount offers, making it non-viable. From an investor’s’ perspective, it only makes sense that some of these companies consolidate, to make it viable. This would mean more jobs cuts, pointed out Mr. Vivek Lohcheb, co-founder of Trupay. “The Indian scenario for e-commerce was a bit different from how e-commerce developed in the West with companies like Amazon. Here, the industry faced over-competition and companies had to continue offering attractive discounts to retain customers. So eventually, in India, because of the competition, it turned out to be not a convenient option but a discount portal for customers. Today, not a single e-commerce company is making profits. The more they sell, the more cash they burn. But, they cannot stop their sales. Now these companies will look at consolidation to create profit margins, which means that a significant amount of employees could become redundant,” he added. Mr. Devesh Rai, CEO and founder of Wydr, said that leaner structures are inevitable. “Building a lean structure, which is able to leverage technology and generate greater cost efficiency at scale is a must for any new age technology company.
PepsiCo is laying off 80 to 100 workers at distribution plants serving Philadelphia. According to the company, a soda tax that is cutting the area’s soda consumption is to blame. The layoffs, which account for roughly 20% of Pepsi’s 423 Philadelphia employees, will begin soon and be spread out over the next few months, as per reports. Philadelphia’s soda tax passed in June 2016 and went into effect in January of this year. The 1 .5-cent-per-ounce soda tax is expected to raise about $91 million annually. As the tax went into effect, local businesses and shoppers reportedly quickly felt the results. Customers apparently began changing their purchasing habits, as the price of two-litre bottles and 12 packs of cans nearly doubled. In mid-February, Bloomberg reported that some soda sellers in Philadelphia said that beverage sales had dropped up to 50% in 2017. Operators of local supermarkets have reported significant drops in revenue, something executives say will result in their cutting of jobs in the near future and have already forced them to slash employees’ work hours. The tax is currently under appeal with arguments expected to begin in April. A Pepsi spokesperson said that if the tax is repealed, the jobs will return.
Chennai-based online hotel room aggregator Stayzilla is shutting down operations owing to tougher competition from bigger rivals and a tighter business environment. The company which started in 2005 and raised about USD 33 million in funding was one of the earliest hotel room aggregators much before GoStays, Oyo Rooms, Airbnb and Treebo entered the market. In a blog post, Stayzilla CEO and founder Mr. Yogi Vasupal wrote this: “I would like to announce that we would be bringing to a halt the operations of Stayzilla in its current form. This has been one of the toughest decisions that I have taken so far but it is the right thing to do.” Mr. Vasupal had started the company as a dropout straight out of college in 2005. “The hardest part is saying goodbye to a perfect team that has accomplished a lot by putting Homestays on the map of India. Whatever and how much ever I write about them is not going to do justice to their commitment,” he wrote. The company was funded by Nexus Venture Partners, Matrix Partners India, Indian Angel Network, Spice Capital and InnoVen Capital. Stayzilla is just one of the internet firms to lay off people this year. Others include Snapdeal, Quikr and Ola. As the funding environment becomes tougher, the year 2017 is expected to see more such consolidation in the first half.
The European Union said it is ready to accommodate more Indian IT professionals and denounced any form of protectionism in global trade, amid anxiety in India over the Trump administration’s possible clampdown on H1B visas. Pushing for deeper trade ties with India, a delegation of European Parliament’s Committee on Foreign Affairs also expressed “regret” over failure by both sides to resume the stalled dialogue to firm the long-pending EU-India trade and investment pact. Criticising the new US government’s protectionist rhetoric which triggered fears in Europe as well, head of the delegation Mr. David McAllister said Europe is “open” for allowing more Indian professionals who are high on demand. “Europe is open for people with high demand. Indian people are highly skilled. Our IT sector would not have been successful if we did not have skilled professionals from India,” he said. Soon after taking over last month, Mr. Trump had decided to overhaul the work visa programmes like the H-1B and L1, a move that will adversely hit the lifeline of Indian tech firms and professionals in the US. Pressing for early resumption of negotiations for the EU -India Broad-based Trade and Investment Agreement (BTIA), Mr. McAllister said the delegation urged the Indian leaders to resume the talks as the pact will significantly boost two-way trade. “We deeply regret that we are not being able to move ahead. We will use the visit to call for resumption of talks for the agreement,” he said. The EU delegation, the second one here, will hold talks with a number of Union ministers, national security adviser Mr. Ajit Doval, the vice chairman of NITI Ayog Mr. Arvind Panagariya and Lok Sabha speaker Ms. Sumitra Mahajan among others.
Vistara, the full-service airline run by a joint venture between the Tata group and Singapore Airlines Ltd (SIA), is hiring a senior executive from its partner to help set up its international operations. Singapore Airlines’ Mr. Basil Kwauk, who has more than 20 years’ of experience in flying and operations, is expected to join Vistara around May, a person aware of the development said. His exact designation at Vistara could not be ascertained. “Long-haul flying is their (Singapore Airlines) expertise. So it should not be surprising,” the person said, adding there was no need for Vistara to hire external consultants for advising the company on its international plans because of Singapore Airline’s extensive experience in the field. Vistara’s chief executive officer Mr. Phee Teik Yeoh also worked with Singapore Airlines, which owns 49% in the Indian company, prior to his current assignment. Mr. Kwauk will work closely with Mr. Yeoh and other senior executives who were brought in 2014 to start Vistara. The move comes as Vistara is set to present its final plan to fly overseas to the company’s board. The presentation will include issues such as route network planning, economics and plane options, the person said.
Last month, the Gurgaon-based Yepme quietly shut down two of its units – warehousing and quality control – letting go of close to 30 employees. But founder Mr. Vivek Gaur insists that the move was towards the company’s growth, and not “because we have no cash.” Apart from names that rhyme, Yepme and Askme seem to have a similar trajectory towards disaster. Yepme had to trim its workforce after it started outsourcing warehousing and quality audits to third-party vendors in India and the US. And yet, according to the five employees we spoke to, Yepme has not formally laid off the team members. “They were told by team leaders verbally. They have been asking for a termination letter, but that hasn’t happened,” one of the existing employees of Yepme said. This is a situation starkly similar to the events that unfolded at AskMe. Its top management kept a lid on the business falling apart, for close to a year. It was never formally announced, but the company was disintegrating team by team. The management went incommunicado, leaving scores of employees without a job and months of salary. If a company terminates employees, they are obligated to pay a bulk sum of money as severance packages, as per employment contracts. Moreover, at least five of the company’s employees we spoke to allege that Yepme management repeatedly delayed salaries, since October. The Yepme founder did not deny it, but said that salaries are delayed only for the month of January. Yepme’s losses have been steadily mounting, despite the fact that Yepme earns higher margins of 40-60 per cent selling private labels. Online marketplaces such as Flipkart and Amazon earn margins of about 30-40 per cent.
The UK remains the largest job creator in India via foreign direct investment, seeing off tough competition from Japan, creating one in ten jobs between April 2000 and September 2016, says a report. However, British investors are eyeing further progress to secure investor protection under the model Bilateral Investment Treaty, greater momentum in reducing corporate tax rates and further improvements in the ease of doing business, according to the CBI’s second Sterling Assets India report, supported by PwC and the UK India Business Council. The CBI is a UK-based business organisation. “Between 2000 and 2016, British FDI created 371,000 jobs 10 percent of all jobs created by FDI. The total number of people employed by British companies in India currently stands at 788,000 representing 5.3 percent, or one in twenty, of private sector jobs,” according to the report. Moreover, the UK is the single largest G20 investor in India, and supports close to 800,000 jobs. Between 2000 and 2016, the UK invested USD 24.07 billion in India increasing its investment by USD 1.87 billion between 2015 and 2016 representing 8 percent of all foreign direct investment (FDI) into the country. The UK remains the largest of all foreign investors into India after Mauritius and Singapore. In 2016, Japan emerged as a tough competitor for the UK.
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