SUMMARY
Flipkart confirmed the development to Inc42, saying that the move is an attempt to balance employee and organisation priorities
“About 70% of our employee base will continue to get an increase in their compensation. Our stock option allocation and bonus exercise will continue as is for those who are eligible,” said Flipkart
Flipkart has an employee base of 15,000 staff. Of this, 10,500 (nearly 70%) are full-time employees that are working under managers and would receive salary hikes in CY2023
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Walmart-led ecommerce giant Flipkart will not give salary hikes to 4,500 professionals working in senior positions in Grade 10 and above categories, which are inclusive of manager and vice president-level roles.
Flipkart took the action to retain cash flow and focus on the company’s profitability, sources told Business Standard.
Flipkart confirmed the development to Inc42, saying that the move is an attempt to balance employee and organisation priorities.
“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% of our employee base will continue to get an increase in their compensation. Additionally, our stock option allocation and bonus exercise will continue as is for those who are eligible,” said a Flipkart spokesperson.
The company further added that it will stay committed to enhancing value for all employees through employee-centric policies, continued skilling and training programs, regular promotion cycles, wealth creation for ESOP holders, and enhanced benefits, including medical insurance.
In a letter, seen by Business Standard, addressed to employees, Flipkart’s CPO Krishna Raghavan said, “At Flipkart, we have always attempted to balance employee and organisation priorities, with our actions being driven by what’s right for our people. Given the current macroeconomic situation, we want to be prudent in managing our resources while keeping our employees’ best interests in mind.”
At present, Flipkart has a base of 15,000 employees. Of this, 10,500 (nearly 70%) are full-time employees that are working under managers and would receive salary hikes calendar year 2023.
Importantly, Flipkart’s new policy will not be applicable to about 200K third-party and contractual workers, which are working with the company in the fields of supply chain and warehouse management.
As hiring has slowed down, the ecommerce giant is also not inducing employees, who are moving out of the company, to stay back either.
Meanwhile, its parent firm Walmart is rolling out an employee stock ownership (ESOP) buyback program to buy digital payment app PhonePe’s stocks worth $700 Mn from Flipkart employees, sourced informed.
The ESOP buyback program would be part of PhonePe’s fundraising plans, where it pledged to raise up to $1 Bn fresh capital after shifting its domicile to India. So far this year, PhonePe has raised $450 Mn from General Atlantic, Ribbit Capital, Tiger Global and TVS Capital Funds and other investors.
In the letter, Raghavan also stated, “Additionally, our stock option allocation and bonus exercise will continue as is for those who are eligible.”
The letter further states that Flipkart would ascertain high-performing employees and would reward them for their contributions to the organisation. There would also be promotions across grades and raises linked with scheduled compensation, which is effective from April and October.
In essence, linked compensation includes direct and indirect pay in the salary packages of employees.
As per the letter, in 2022 and 2021, the ecommerce giant invested in different skilling and training programmes for employees, salary hike, and compensation corrections. It further maintained regular promotion cycles, enhanced employee benefits such as medical insurance and provided liquidity opportunities to ESOP holders.
In November last year, Flipkart was reported to be mulling an ESOP buyback programme to facilitate PhonePe’s fundraising plans.
The development comes shortly after Walmart’s quarterly call, where Walmart CFO John David Rainey shared that Walmart’s ecommerce arm Flipkart expanded its positive contribution margin and also fuelled its gross merchandise volume (GMV) and revenue growth.
While talking about PhonePe, Rainey said the digital payments major processed an annualised total payments volume (TPV) of more than $950 Bn in the fourth quarter, up nearly 50% as compared to the corresponding period last year. During the fourth quarter, the app also logged over 4 Bn monthly transactions.
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