Xiaomi India To Undertake More Layoffs In An Organisational Restructuring Exercise

Chinese smartphone manufacturer Xiaomi is reportedly cutting down its Indian workforce as a part of its organisational rearrangement. At the beginning of this year, the company had 1,400-1,500 employees which is going to be brought down to below 1000. 

The company has been reported to have fired 30 employees already, with more layoffs to come soon. The decision came after the company witnessed setbacks due to declining market share combined with increased scrutiny by government agencies. 

According to an Economic Times report, the restructuring plans and authority is vested with the Chinese operations. 

The report quotes Xiaomi India saying, “As with any company, we take headcount decisions based on the market’s state and business projections.” However, according to Xiaomi, it continues to hire talent “when and where needed”.

Initially, the company is going to take the employees under a performance improvement plan (PIP) . Later, on the grounds of PIP results, some employees may be laid off.

Employees speculate that the business related decisions of the Chinese counterpart are affecting the market share and business profitability in India.  

The decision comes weeks after the Enforcement Directorate issued a show cause notice to Xiaomi in connection with a probe involving alleged illegal remittances. According to ED officials, this notice was issued to the current chief financial officer (CFO) Sameer Rao, former MD Manu Jain, and three banks under the provisions of the Foreign Exchange Management Act, 1999.

In connection with this notice, the ED also issued notices to Citibank, HSBC Bank and Deutsche Bank AG for allowing Xiaomi to send remittances overseas in the guise of royalty without proper due diligence. 

On the contrary, this is the same smartphone manufacturer which announced plans to go the ‘Make In India’ way last month. Xiaomi announced that in partnership with contract manufacturer Dixon Technologies, it would boost its smartphone production in India.

In addition to this, recently, yet another Chinese smartphone major Realme India also faced a major setback when its VP & CEO Madhav Sheth stepped down. The lead of the Indian operations has been taken up by Realme founder Sky Li. However, Sheth will continue to serve as a strategic advisor to Realme’s global product observations, market insights, and operations.