Snapdeal reportedly laying off 30pc of its workforce

Amid the funding crunch and top-level executive exits, Snapdeal is reportedly planning to lay off 30 percent of its workforce.

Citing four people, the Economic Times report says that in the next two months, Snapdeal is planning to cut off 30 percent of the workforce, which will affect more than 1,000 employees in the marketplace division.

The first round of layoff began last week. Numerous contract workers in the company’s logistics and operations division are also expected to see the pink slip.

A Snapdeal executive said, “5,000-odd contract staff employed by the company’s logistics subsidiary Vulcan Express will be pared down as well as about 3,000 people on the rolls of the logistics company."

Though the company did not confirm the layoff news, a Snapdeal spokesperson said, “On our journey towards profitability, it is imperative that we continue to drive efficiency in our business, which enables us to pass on the value to our consumers and sellers. As in the past, and like all good companies do, we will continue to assess resource allocation in furtherance of our goals of enhancing customer and seller experience while driving high-quality growth.”

The move is apparently aimed at cost-cutting employee-related expenses, which rose to Rs 911 crore in FY 2016, 148 percent up from the previous fiscal. According to the report, employee expenses are the largest cost for Snapdeal after marketing and advertising, where salaries are a fixed cost.

In February 2016, the company has reportedly put over 200 employees on a Performance Improvement Program and "eventually let go of the additional staff."

For the financial year 2015-16, the company’s total sales grew 56 percent to Rs 1,457 crore, but losses more than doubled to Rs 2,960 crore.

Jasper Infotech, the owner of Snapdeal, raised funds in August 2016 at a valuation of $6.5 billion. Since then, Jasper Infotech has been struggling to raise a fresh round of capital.

Over the past few weeks, Snapdeal has witnessed a series of senior-level exits, including senior vice-president of partnerships and strategic initiatives Tony Navin, senior vice-president and head of the consumer-to-consumer platform Shopo, Sandeep Komaravelly and Abhishek Kumar, head of corporate development.