Amid increased government scrutiny and falling market share, Xiaomi India is reportedly slashing its workforce in the country to less than 1,000 employees, Economic Times reported Thursday. The report revealed that the Chinese company fired 30 employees last week of the approximately 1,500 people it employed at the beginning of the year.
One of the company’s senior executives was quoted by Economic Times as saying that Xiaomi India has prepared a performance improvement plan (PIP), based on which non-performing employees would be sacked.
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“As with any company, we take headcount decisions based on the market’s state and business projections,” Xiaomi said in a statement. Although it mentioned that the company will continue to hire talent ‘when and where needed’.
Xiaomi reviewing company strategy
The Chinese parent company of Xiaomi, a popular smartphone brand in India, is reportedly making decisions regarding internal restructuring and changes. According to the company, the goal of this move is to enhance operational efficiency, streamline the organisational structure, and optimise resource allocation. Throughout the year, the company has been reviewing its strategies, leading to a steady decline in its workforce.
Xiaomi India in hot waters
In the first quarter of 2023, Xiaomi India experienced a drop in shipments, with only five million units sold compared to 7-8 million units the previous year. This decline has caused Xiaomi to lose its position as the top smartphone brand in India, a title it held for 20 consecutive quarters. It now ranks third, trailing behind Samsung and Vivo, with a market share of 16 per cent.
Furthermore, in June, the Enforcement Directorate, India’s economic intelligence agency, issued show-cause notices under the Foreign Exchange Management Act to Xiaomi India, its officials, and three banks. The allegations involve foreign exchange violations amounting to more than ₹5,551 crore. Show cause notices were served to Manu Kumar Jain, the former Managing Director, and Sameer B Rao, the Director and Chief Financial Officer of the company.
India’s ties with China ‘abnormal’
Xiaomi India finds itself sitting in the crosshairs of deteriorating ties between India and China. India’s External Affairs Minister S. Jaishankar earlier in April said that India’s ties with China were “abnormal” due to a violation of border management agreements by Beijing.
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