In a significant strategic shift, Samsung Electronics India has announced plans to lay off over 200 executives, constituting nearly 10% of its managerial workforce.
These layoffs come as the company faces a combination of factors impacting its operations: slowing business growth, declining consumer demand, and increased competition.
The Context
Samsung India, the country’s largest consumer electronics and mobile phone manufacturer by revenue, has been grappling with a slowdown in its business.
The company has faced challenges in maintaining its market share, particularly in the cash cow segment of smartphones. In response to these challenges, Samsung is taking decisive steps to reduce costs and improve profitability.
The layoffs will impact various functions within Samsung India, including Mobile Phones, Consumer Electronics, Home Appliances, Support Functions.
Approximately 9-10% of the total managerial workforce—currently around 2,000 executives—will be affected by these layoffs. The layoffs are part of a broader cost-reduction strategy aimed at streamlining operations and enhancing efficiency.
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Strike at Chennai Factory
Adding to Samsung’s woes, workers at the company’s Chennai factory are currently on an indefinite strike. This labor unrest has disrupted production of critical appliances such as televisions, refrigerators, and washing machines.
The strike, now in its third day, has significantly impacted production levels, with the factory operating at only 50-80% of its capacity.
The timing couldn’t be worse—the strike occurs just ahead of the crucial festive season, when consumer demand typically surges.
Samsung India is contemplating restructuring its operations. One potential move involves merging certain business divisions, such as television and home appliances.
If these mergers occur, it may lead to further job losses within the organization. The final decision on restructuring will likely be made after the Diwali season.
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Hiring Trends at Samsung
Samsung has frozen fresh hiring, meaning that roles vacated by executives who voluntarily exit will not be filled. The company may also reduce the number of off-roll employees, further streamlining its workforce.
Employees being laid off will receive three months of salary as per their employment contracts. Additionally, a severance package will provide one month’s salary for every year of service within the organization.
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