[Update: Samsung’s response] Samsung to allegedly cut 1,000 jobs in India due to pressure from Chinese rivals

[Update: Samsung’s response] Samsung to allegedly cut 1,000 jobs in India due to pressure from Chinese rivals

Update 1 (7/02/19 @ 7:00 AM ET):  Calling the report “speculative” and “misleading,” Samsung says it has hired almost 2,000 employees in the last year and will be creating more job opportunities in the future.

Samsung is the largest mobile phone OEM by volume in the world, but its dominance in India is challenged by Chinese peers like Xiaomi, Vivo, Realme etc. The Korean manufacturer was at the leading smartphone brand in India until the second half of 2017 it lost this title to Xiaomi. The company has been moving forward aggressively with the new Galaxy M series and the refreshed Galaxy A series to recover its sales but the pressure doesn’t seem to end anytime soon. Samsung is now reportedly firing 1,000 employees as part of its cost-cutting endeavors.

Alongside the smartphone division, these jobs will also be cut from Samsung’s electronics arm which manufactures TVs as well as other home appliances. With this “cost rationalization” exercise – and reduction in margins, Samsung primarily aims to cut the prices of its smartphones and televisions. Since 2017, Samsung has already reduced the prices of these products by up to 40% to allure Indian consumer as the company faces challenges from Chinese rivals.

Samsung currently has nearly 20,000 employees in India and is reviewing the performance of nearly 10% of the employees. These employees are employed in the sales, marketing, R&D, manufacturing, finance, HR, and corporate relations departments.

Besides reevaluating the prices of its products, Samsung also intends to build a team for 5G-related development in India. The company will also decide on frozen recruitments based on the financial recovery following its job-cutting endeavor.

As per reports, Samsung has already begun the realignment of its workforce and laid off nearly 150 employees out of the intended 1,000. The exercise is set to be concluded by October of this year.

According to Tarun Pathak, the associate director at Counterpoint Research, Samsung was able to recover declining sales in the last quarter with the global success of the Galaxy S10 series. The company has also streamlined its portfolio of products and the recovery depends on consistent performance over the next few quarters.

Latest data reports that Xiaomi led online smartphone sales in the first quarter of this calendar year with a 43% market share, followed by Samsung at 15%, which is basically around one-third. Overall, Xiaomi leads the smartphone market with a 29% share while Samsung stands second with 23% of the sales.

Source: The Economic Times


Update: Samsung denies job cuts

After the publishing of this post, Samsung reached out to us with a comment. As per the written communication shared by Samsung, the report by The Economic Times about it cutting 1,000 jobs is speculative. The company also said that it has hired more than 2,000 people over the last year and will be creating more opportunities in India through various endeavors.

Here’s an official statement by Samsung India’s spokesperson:

Today’s article about Samsung in a section of the media is misleading.  Samsung is committed to India and continues to invest significantly across its businesses.

We have demonstrated our commitment by building the World’s Largest Mobile Factory in Noida, investing in local R&D and we are exploring new businesses such as 5G Network, among others. 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.

As regards to business, with new products across categories, we have been able to consolidate our market share further, and we are confident of another record year.

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