Snapdeal has confirmed that it has begun the process of trimming down its workforce. The Indian Express reported that the company had laid off over 600 people from Snapdeal and its sister concerns Vulcan and Freecharge.
The founders of the company, Kunal Bahl and Rohit Bansal, also said that they will not take a salary but the duration of this salary cut was not made clear. They also said that other officials in the company had also come forward and taken voluntary cuts in salaries to support the company.
The Economic times had reported earlier that such a move was being planned and that it could affect up to 1,000 jobs. Though the exact number of employees who have been let go is not known, company officials said that it may not be much more than 600.
The announcement of the layoffs came following an email that the founders sent to the company, in which they stated that it was time that the company took some tough decisions to cut costs. It also said that such decisions were common among many of the companies like Apple, Amazon, Lego, etc.
In an interview Mr Bahl said that Rohit and he bore responsibility for this situation since the company had made some crucial mistakes. He said that they had started working on expanding the company before the markets were ready. He also blamed himself for having started diversifying into new projects without perfecting old ones.
According to the letter from the founders the new structure of the company will be a lean and more focused one. The letter said, “We are combining teams, reducing layers, eliminating non-core projects and strengthening the focus on profitable growth.” The the aim of the new team will be to make the company profitable in the next 2 years while focussing on their core projects.
The company’s expenditure on employees went up 148% in the last financial year, 2016, to reach Rs.911 crore. It also reported losses of Rs.3,316 crore and a revenue of Rs.1,457 crore for the same period. The company has also been facing problems getting funding to compete successfully with Amazon and Flipkart, its two main rivals, with the last round of funding amounting to $27 million in Aug 2016.