Flipkart implements performance-based job cuts amid restructuring plans, 5-7% workforce to be affected

E-commerce major Flipkart is implementing performance-based job cuts which will decrease team size by 5-7 percent, Times of India reported quoting sources. The cuts will be based on annual performace reviews and will be completed by March-April.

A major player in the Indian e-commerce industry, the Walmart-owned company is set to undergo a restructuring phase to optimize its resources and operations. The company, excluding its fashion portal Myntra, currently sustains a workforce of 22,000 individuals.

This is not the first instance of Flipkart implementing performance-based job cuts. The report added that similar exercises have been in practice over the last two years.

Additionally, as part of cost-control measures, Flipkart has refrained from fresh hiring in the past year. The company is finalizing a $1 billion financing round, including contributions from Walmart and other investors.

Sources told the paper that Flipkart is gearing up to enhance the utilisation of its resources across existing and new business ventures. Discussions and decisions regarding the restructuring plans and the 2024 roadmap are slated for a meeting involving senior executives in the coming month.

Future Plans

Despite the ongoing restructuring, Flipkart maintains its decision to defer its initial public offering until 2024, the sources said. Previous plans for an IPO in 2022-23 have been temporarily halted.

Flipkart's strategic ventures, including its recent acquisition of Cleartrip, part-owned by the Adani Group, have achieved a gross merchandise value (GMV) of approximately $1.5-1.7 billion. The company is eyeing further investments in its hotel business, expanding Cleartrip's services beyond airline bookings.

Sources close to the company affirm that Flipkart has been diligently working on internal synergies for several months. The restructuring aligns with the company's aim to reassess its current and future business trajectories. They added that while securing $600 million in fresh capital from parent company Walmart as part of the ongoing $1 billion round, Flipkart's senior management is actively seeking ways to reduce expenses across different categories.

Industry-Wide Team Rationalisation

Various major Indian internet companies, buoyed by high demand for technology services during the pandemic-induced surge in 2021, are now rationalising their teams. Industry experts foresee similar actions from other venture-funded Indian organizations throughout 2024.

Flipkart's restructuring phase mirrors the e-commerce industry's highs and lows in 2023, prompting necessary corrections, insiders told the paper. The annual appraisal cycle at Flipkart drives these team restructuring efforts, aimed at optimizing operations and resources. The industry-wide adjustments are a response to the changing dynamics in the e-commerce sector.