Samsung is firing 1,000 employees in India as cheaper Chinese smartphones squeeze profits

Samsung is firing 1,000 employees in India as cheaper Chinese smartphones squeeze profits
Samsung is laying off 1,000 employees in India as a part of its cost rationalisation programme to increase profitsIANS

  • Samsung is letting go of around 1,000 employees in India as a part of its ‘cost rationalisation programme’.
  • Industry insiders told the Economic Times that is due to Samsung’s dip in profits as more and more Chinese companies enter the Indian market.
  • Last month, Samsung laid off workers at its last manufacturing plant in China and currently, the majority of its global smartphone happens in Vietnam.
Samsung is in the midst of a ‘cost rationalisation programme’ that entails letting go of around 1,000 employees that currently work for the company in India.

The process is already underway according to industry insiders who spoke to the Economic Times. The South Korean tech giant submitted a list of employees from their 20,000-strong workforce in the country who have been underperforming and not been delivering on team targets to the headquarters in Seoul.

The overall list makes up for around 10% of the company’s total team strength spreading across departments like sales, R&D, human resources and finance.

As many as 150 of its employees from the telecom networks division have already been let go of. Samsung plans to finish the exercise by the end of October this year, according to the report.

Executives have shared that this move is focused on generating more profit from Samsung’s India operations, a pivot from their prior impetus on revenue.

Samsung, on the other hand, has denied the report stating, "In the past one year, we have generated 2,000 new jobs at Samsung. Samsung India’s business continues to grow and expand, hence we will hire more talent across businesses through the year. As we contribute to job creation, we continuously realign resources as per business priorities to make our business more robust and efficient for long term success."

Under pressure

Samsung is still the second largest player in the Indian smartphone market according to Counterpoint. However, it has been unable to re-claim its throne back from Xiaomi, the Chinese smartphone manufacturer which massively undercut phone prices on its entry.

Even when it comes to premium smartphones, OnePlus has been giving Samsung a run for its money by launching high-end smartphones for under ₹50,000.

But, Samsung is not only a smartphone manufacturer but is also a consumer electronics company — so, it has its hands in a lot more pies. Xiaomi took another bite out of that pie when they launched Mi Smart TVs in India.

The Chinese company claims, quoting data from the International Data Corporation, that it has been largest TV brand in India for the last four consecutive quarters.

The resulting price cuts on smartphones and television led to lower margins and thus lowering Samsung’s profits according to executives.

Not just in India

The pressure has been building on Samsung in China as well where slowing sales and increasing competition led to layoffs at its last functioning plant in Huizhou — after its Tianjin and Shenzhen plants were shut down — in the country last month.

And it’s not just its own sales that the company has to worry about. Apple’s falling sales have already adversely affected the South Korean giant who manufacturers iPhone displays ‘exclusively’ for the American smartphone maker. It now has to deal with an excess supply that it can’t unload.

As of now, Samsung’s impetus lies in manufacturing in Vietnam where half of Samsung’s smartphones are manufactured.