Samsung (Photo: Bloomberg)
Samsung Electronics is set to lay off over 200 executives across its Indian operations as the company faces slowing business growth and mounting competition, according to a report by The Economic Times (ET) citing senior industry executives. The electronics giant’s decision to cut its managerial workforce by 9-10 per cent comes in response to declining consumer demand, particularly in its core smartphone business, as well as a broader effort to reduce costs and improve profitability.
Layoffs across departments
In response to the layoffs, Samsung is offering affected employees a severance package that includes three months’ salary, in line with their contracts, as well as one month’s salary for every year of service at the company.
A senior industry executive told ET that Samsung’s salary packages for junior and mid-level employees in India had risen sharply in recent years, particularly during a period of double-digit business growth. However, with the current slowdown, the company is being pressured by its Seoul headquarters to implement a ‘course correction’ and manage rising costs more effectively. “There is a clear push from Seoul to reduce costs in Indian operations. The lay-off process has begun and could increase after Diwali if sales don’t improve,” the executive said.
Samsung to restructure Indian ops
As part of its cost-cutting measures, Samsung may also restructure its Indian operations by merging certain business divisions, such as television and home appliances. This restructuring could result in additional job cuts as the company seeks to reduce inefficiencies and streamline management layers.
A final decision on this potential reorganisation is expected to be made after Diwali.
Samsung loses volume leadership in smartphone market
Struggles of the South Korean tech major are particularly evident in the competitive smartphone market, where the company has lost volume leadership to Chinese competitor Xiaomi. According to tech market research firm Counterpoint Research, Samsung’s volume share in India’s smartphone market dropped to 18.1 per cent during the April-June quarter of 2024, down from 18.4 per cent a year earlier. Xiaomi, with an 18.9 per cent share, has taken the lead, followed closely by Vivo at 18.8 per cent. Despite the decline in volume, Samsung remains the market leader by value, holding a 24.5 per cent share, ahead of Vivo at 16.8 per cent and Apple at 16.3 per cent.
In response to the news, a Samsung India spokesperson told ET, “We are reorganising our workforce with the objective of enhancing organisational performance and increasing market competitiveness. We care for the well-being of our employees and are committed to supporting them through this transition.”
Key departures from Samsung
Earlier this year, Samsung India witnessed key departures from its mobile phone and electronics divisions. Among them was Mohandeep Singh, a senior executive who had been with the company for 14 years and led both its mobile phone and television businesses. Singh left Samsung in June and has since joined Jubilant Agri & Consumer Products as its CEO, according to his LinkedIn profile.
Samsung’s Chennai manufacturing plant strike
This development also coincides with a strike at Samsung’s Chennai manufacturing plant, which has entered its third consecutive day. The strike, initiated by factory workers, has disrupted the production of televisions, refrigerators, and washing machines at a critical time as the company prepares for the festive season when sales typically peak. Despite the strike, the plant continues to operate at 50-80 per cent of its normal capacity, the report mentioned.
First Published: Sep 11 2024 | 1:50 PM IST
