Xiaomi India, which employed 1,400-1,500 people at the start of 2023, laid off around 30 people in the past week or so, and more are likely to be given the pink slip in the coming months, employees cited above said.
They said the business restructuring has vested most of the decision making in the hands of the Chinese parent, and that the company has been steadily reducing headcount since the start of the year.
When reached out for comment, a Xiaomi India spokesperson, however, said the headcount decisions were a function of business outlook, and that the local Indian leadership has been “empowered”.
“As with any company, we take headcount decisions based on the market’s state and business projections,” Xiaomi said, adding that the firm continues to hire “when and where needed”.
Another senior executive currently working at the company, though, said the leadership team at the start of the year was nudged to designate a part of their respective teams for a performance-improvement-plan (PIP). These employees could then be easily let go on performance grounds.The layoffs come with the company rejigging its internal structures, with most of the decisions now being taken by the Chinese parent – a change that several employees said was at the heart of the company’s slipping market share.Xiaomi India and market tracker Counterpoint Research rejected this reasoning and attributed the fall in its market share to weak demand in the sub-Rs 10,000 segment – where Xiaomi had the highest volumes – which suffered a 44% decline in shipments, the largest the brand ever recorded.
Xiaomi India’s shipments fell to 5 million in the first quarter of 2023, from 7-8 million a year ago, and it slipped to the third position behind Samsung and Vivo with a market share of 16% after being the top smartphone brand in India for 20 straight quarters.
Counterpoint said the company will have a modest year in 2023 with a sharp on-year decline in shipments.
The company has been facing business challenges including a cash crunch with the Enforcement Directorate (ED) seizing over Rs 5,500 crore of its bank assets for allegedly remitting money abroad illegally.
Xiaomi, whose 2021-22 revenue grew 9% to Rs 39,099 crore, is legally challenging the ED’s accusations and seizure.
The company, which entered India in 2014, swiftly rose to become the top ranked smartphone brand in the third quarter of 2018.
But of late, like many other Chinese companies, Xiaomi has been facing the heat from the government.
The exit of former India head Manu Kumar Jain in June 2021 was followed by former Xiaomi Indonesia head Alvin Tse taking over the mantle as general manager and the subsequent elevation of Muralikrishnan B as the president of India operations.
Several employees told ET that all key team leads across online and offline sales, distribution, marketing, and product categories report directly to Tse, who participates in all meetings and makes most decisions through the business management committee (BMC) after discussions with the headquarters, and even conducts performance appraisals.
The company spokesperson downplayed the transfer of decision-making power.
“Concerning decision making at Xiaomi India, as with any MNC and Fortune Global 500 company, while we have a strong and empowered Indian leadership team on the ground, we also have various coordination mechanisms with our headquarters where Indian and global leaders jointly take critical decisions,” the person said.
Another senior Xiaomi executive said the BMC includes members of the India leadership.
The layoffs and internal changes come in the background of the ED case. While fighting the matter in courts, Xiaomi’s lawyers said the company is facing a cash crunch and asked for an interim order allowing it to use its bank accounts to pay for day-to-day expenses.