At a time when tech companies are cutting costs to increase their profitability, e-commerce major Flipkart has decided to restrict annual increment of salaries to only 70 percent of its employees, which means that around 5,000 of its senior staff won’t get any hikes this year.
It was communicated to employees through an email on February 22 that those who are at Grade 10 and above levels won't get any hikes. However, bonus payouts and employee stock option allotments are on track as planned for the employees of the Walmart-owned company, according to a person aware of the developments.
While the company’s annual appraisals have been completed, the increments are due to kick in from April 1.
“Given the current macroeconomic situation, we want to be prudent in managing our resources while keeping our employees’ best interests in mind. In line with this, about 70 percent of our employee base will continue to get an increase in their compensation,” Flipkart said in a statement.
“Additionally, our stock option allocation and bonus exercise will continue as is for those who are eligible. We stay committed to enhancing value for all our employees through employee-centric policies, continued skilling and training programs, regular promotion cycles, wealth creation for ESOP holders, and enhanced benefits, including medical insurance,” it said.
Moneycontrol had reported earlier that Flipkart will buy back employee stock options worth about $700 million from employees as a part of its move to separate full ownership of payments and financial services unicorn PhonePe, as the e-commerce giant looks to hire and retain talent at a time when most startups in the country are undertaking layoffs due to the ongoing funding winter.
This massive payout is expected to take place in the next few months after the paperwork for the separation of Flipkart and PhonePe is completed, according to people close to the developments.
One of the highlights of Walmart in the quarter ending January (Q4) was that its international business saw operating income drop 72 percent in constant currency terms to $300 million, primarily due to the re-organisation of Flipkart and PhonePe as separate businesses.
Flipkart’s contribution margin is positive and continues to expand and it accounts for a large portion of Walmart's international e-commerce sales, top executives of the US retail major said in an earnings call on earlier this week.
They also said that the Indian e-commerce marketplace is benefitting from investments in infrastructure made in the last three years and riding on India’s strong economic prospects.
In the past few months, tech giants like Amazon and Google have decided to lay off 18,000 and 12,000 employees to focus on profitability. Moreover, unicorns like Byju’s, Sharechat, Swiggy, Zomato and others have also cumulatively let go thousands of tech workers as they try to prune costs and restructure their businesses in a tough macro environment.
Nearly 5,000 of Flipkart's senior staff won’t get any pay hike this year - Moneycontrol
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