Samsung, the global tech giant, has announced plans to streamline its workforce in India as consumer demand slows down. The layoffs, expected to impact around 9-10% of its total managerial workforce of 2,000-odd executives, will primarily target the company’s mobile phones, consumer electronics, home appliances, and support functions divisions.
The employees being laid off are being offered a severance package that includes three months’ salary as per their employment contract, as well as an additional one-month salary for every year of service within the organization.
The layoffs come at a time when Samsung has been facing challenges in its mobile phone business, particularly to Chinese rival Xiaomi. According to Counterpoint Research data, Samsung’s volume share in smartphones declined from 18.4% a year ago to 18.1% in the April-June quarter, while Xiaomi’s share rose to 18.9%.
Earlier this year, Samsung India had also seen some senior exits from both its mobile phone and electronics business, including the departure of Mohandeep Singh, who was among the top two Indian executives leading the company’s mobile phone and electronics divisions. Singh, who was the head of the television business, left Samsung in June after a 14-year tenure and has since joined Jubilant Agri & Consumer Products as its chief executive.
The decision comes at a critical juncture, as Samsung’s Chennai factory workers have been on an indefinite strike for the past three days, disrupting the production of televisions, refrigerators, and washing machines just before the crucial festive season. The company is currently operating the plant at around 50-80% of its capacity, as it navigates the challenges posed by the labour unrest.
These layoffs are just the tip of the iceberg. Samsung India is also likely to restructure its operations, which may include the merger of certain business divisions, such as the television and home appliances segments. If this restructuring plan comes to fruition, it could potentially lead to an even higher number of job cuts, as the company aims to streamline its management layers, reduce manpower, and cut overhead costs.
The layoffs and restructuring at Samsung India are part of a broader effort by the company to adapt to the changing market dynamics and remain competitive in the face of growing competition, both from domestic and international players.
As Samsung navigates these turbulent waters, the company is employing a multi-pronged approach to regain its footing. In addition to the layoffs and restructuring, the tech giant is also exploring ways to streamline its operations, improve efficiencies, and better align its workforce with the evolving market demands.
The challenges faced by Samsung in India serve as a cautionary tale for the broader consumer electronics and mobile phone industry. As the market becomes increasingly competitive, companies must be willing to adapt, streamline their operations, and make tough decisions to ensure their long-term sustainability.
As Samsung grapples with the complexities of the Indian market, the company’s roadmap ahead is marked by a delicate balance of cost-cutting measures, strategic restructuring, even as it relentlessly pursues market share. The layoffs and division mergers are just the beginning, as the tech giant seeks to streamline its operations and adapt to the changing landscape. The layoffs and restructuring at Samsung India represent a pivotal moment for the company, as it navigates the challenges of a highly competitive market and strives to regain its footing. While the decision to streamline the workforce may be a difficult one, it is a necessary step in the company’s efforts to align its operations with evolving market demands.
