KOLKATA: Samsung will slash about 1,000 jobs in India as the brutal war with Chinese companies forces the Korean giant to cut prices of smartphones and televisions, shaving off margins and reducing its profits, said three senior industry executives who sought anonymity.The executives said the job cuts were part of a cost rationalisation programme undertaken by the country’s largest consumer electronics and mobile phone maker by revenue. Samsung has already laid off 150-odd employees at its telecom networks division and will complete the entire manpower rationalisation exercise by October, they said.A Samsung India spokesperson said the company is committed to India and continues to invest significantly across its businesses. This includes setting up the world’s largest mobile phone factory, investing in R&D and exploring new businesses such as 5G networks, he said.“As we grow, our efforts are leading to more job creation. At the same time, we continue to make our business more efficient and robust for long-term success. For which, Samsung continuously realigns resources as per business priorities. Samsung is committed to job creation and will add manpower through the year,” the spokesperson said.70033696 SAMSUNG INDIA HAS 20K EMPLOYEES“As regards business, with new products across categories, we have been able to consolidate our market share further, and 2019 will be a record year for the company,” the Samsung India spokesperson added.As per industry estimates, Samsung has around 20,000 employees in India.Business heads have already submitted to HC Hong, the president of Indian operations, the names of under-performers and those not delivering targeted results in their teams, said people familiar with the developments. In some businesses and functions, the list makes up about 10% of the total team strength. But there is no fixed number, the executives said.Executives said the manpower rationalisation exercise will encompass sales, marketing, R&D and manufacturing, as well as support functions such as finance, human resources and corporate relations. The exercise has been endorsed by Samsung’s headquarters in Seoul, with the focus now more on generating profit growth — rather than revenue — from India, they said.Samsung India had frozen recruitments since April, which will be reviewed later depending on financial performance during the upcoming festive season, the executives said.Samsung India’s problems started in 2017-18, when it first reported a fall in net profit. As per the latest disclosures with the Registrar of Companies (RoC), the company’s net profit in FY18 fell 10.7% to Rs 3,712 crore while total income grew at a similar pace to Rs 61,065 crore. Financials for 2018-19 are still not available with the RoC, but industry executives said profit growth has remained under strain.ONLINE CHALLENGESamsung has faltered on online smartphone sales, failing to anticipate the rapid growth clocked in this channel since 2016 by brands like Xiaomi and OnePlus. The story was repeated for televisions from end-2017 onward. The online channel currently accounts for 40% of total smartphone sales and 30% of total television sales in India.The company has dropped prices for smartphones and televisions by 25-40% since end-2017 to compete with price-aggressive Chinese rivals and online-focussed brands such as Xiaomi, OnePlus, Vivo, TCL and Realme. The maximum price cuts have been for online-exclusive smartphone models such as the Galaxy M Series and the Super6 Series of ultra-HD smart TVs launched this year.“The price drops have had an impact on the bottom line. Also, the Chinese brands have far leaner organisational structures. For instance, Xiaomi India has just 900-1,000 employees. Hence, the need for Samsung’s cost rationalisation exercise. The layoffs in the network division are aimed at building the team for 5G in India since they currently focus on 4G,” said an executive.Analysts said Samsung has made its smartphone portfolio leaner and a full recovery will depend on consistent performance over the next few quarters.Tarun Pathak, associate director at market tracker Counterpoint Research, said Samsung India has been able to arrest the decline in smartphone market share in the January-March quarter.“A lot will now depend on the performance of the Galaxy M and A Series of smartphones, and how they position these,” he said.As per Counterpoint Research, Xiaomi has 43% share in online smartphone sales as of January-March, followed by Samsung at 15% and Realme at 11%. In the overall smartphone market, Xiaomi again led with 29%, Samsung at 23% and Vivo at 12%, the researcher said.Industry executives said Samsung is the largest player in the overall TV market with around 30% share. However, Xiaomi — quoting IDC data — has claimed to be the largest smart TV brand in India for four quarters with 39% share as of January-March, followed by LG at 15%, Sony at 14% and Samsung at 12%.Samsung India had last resorted to retrenchments in 2015-16, when it laid off several hundred employees after its smartphone sales slowed down owing to the challenge posed by home-grown Micromax and the Chinese brands. While the company had not shared the total number of jobs lost then, media reports had pegged the number at 750-800.
from Economic Times https://ift.tt/2NsSkZ5
No comments:
Post a Comment