Snapdeal to cut 30% jobs as fund sources dry up

Snapdeal aims to trim about 30 per cent of its workforce over the next two months. The online marketplace plans to drastically cut costs as the Indian ecommerce industry battles slowing growth and a paucity of investors willing to provide fresh rounds of funding, according to an Economic Times report citing people of the Gurgaon-based company's plans.

The move is expected to affect about 1,000 employees directly employed in the company's ecommerce marketplace while thousands of contract workers in the company's logistics division are also expected to be let off.

"Some 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," a company executive and two consultants working with the company were quoted as saying.

In an email sent out to managers within the marketplace operations earlier this week, the company asked them to "right-size" their respective teams.

With this round of layoffs, the company is expected to let go of about 1,000 from the marketplace. The latest round began last week.

Jasper Infotech, which owns and operates Snapdeal, raised funds last in August 2016 at a valuation of $6.5 billion.

A representative for the SoftBank-backed Snapdeal said the company "will continue to assess resource allocation", in an emailed response to ET's queries.

In February 2016, Snapdeal had put over 200 employees on a Performance Improvement Program and eventually let go of the additional staff.

Jasper Infotech employs about 10,000 people across all operations, including the ecommerce marketplace Snapdeal, payments platform FreeCharge and logistics and supply chain arm Vulcan Express, according to company representatives.

This estimate also includes over 5,000 contract workers in Vulcan.

"The company now has an investor which has suddenly gone cold on India and is looking to right-size operations by reducing discounts, which in turn will reduce orders and requirement of staff," said one of the ET's sources.

The company's employee-related expenses rose to Rs911 crore in FY 2016, up 148 per cent from the previous fiscal. Employee expense is the largest cost for Snapdeal after marketing and advertising. But unlike the latter, which is a variable cost, wages is a fixed cost.

For the financial year 2015-16, the company's total sales grew 56 per cent to Rs1,457 crore, but losses more than doubled to Rs2,960 crore.

The decision to further reduce its workforce also comes on the back of the company's decision to shut down Shopo, the Etsy-like online consumer-to-consumer platform for small sellers that it relaunched in 2015, and in which chief executive Kunal Bahl had said the company would invest $100 million.

Jasper Infotech has been struggling to raise a fresh round of capital. Attempts to raise capital for FreeCharge independently have also not yielded any results.

The company has seen 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 over the past few weeks.