New Delhi: Samsung India has begun to fire employees, particularly in the TV and home appliance divisions. This follows an increase in costs and slowing sales.
What happened
Samsung India has started making slashes, progressively in small waves. The cuts are targeted at its television and home appliances divisions, which face challenges from the rising prices and sluggish demand. Some 80 to 100 executives from the two divisions have been called upon so far. It is not just any number of positions that will be affected, it’s people at many different levels from team leaders and director’s positions at the head office to the branch and area managers.
Some of them have reportedly already been given their severance, and a handful have been fired without having to complete their notice period. The company reportedly is offering three months of salary and an additional month for each year of service.
Why this is happening
In recent years the price of memory chips has more than doubled. The fall in the sales of its smart phones, due to the possible reason of lower demand, have lowered Samsung’s sales and profit margins, along with other reasons which include the costlier materials. But that’s not all; the Indian rupee has depreciated by almost 10 percent so far this fiscal year, this also making it more expensive to import smartphones and other electronics from outside of India.
The layoffs will not impact Samsung’s most successful segment in India the mobile phone industry. Smartphones represent about three-fourths of Samsung India’s revenues, and sales of the phones could significantly boost the company’s overall figures there. Despite this however, Country has seen sales of phones decline by about 11-12% year-on-year. However, despite its effort, it’s been difficult for Samsung to expand its market share in the premium air conditioner segment in India, even this year.
What could come next
Samsung could make further job reductions at its TV and appliance operations, industry sources report, perhaps following the Diwali festival season. The number of jobs that could be impacted, and when, remains to be seen.
