Since yesterday online media is abuzz with the news that Yahoo has fired everybody from their Software Development Center (SDC) in Bangalore. While, the news is partially true, it is completely false that Yahoo is closing their SDC in India, in fact far from it. Here is the truth along with official confirmation from Yahoo themselves.
$16.8 billion worth Yahoo has fired around 400 employees from its Bangalore office in the last few days. This is almost one third of its workforce in India and 3.5% of its overall workforce. As per reports coming in, almost all software engineers would be fired from India and the most senior managers and developers have been asked to relocate to it’s Sunnyvale, California office.
As per the official statement released by Yahoo regarding this layoffs:
“As we ensure that Yahoo is on a path of sustainable growth, we’re looking at ways to achieve greater efficiency, collaboration and innovation across our business…To this effect, we’re making some changes to the way we operate in Bangalore leading to consolidation of certain teams into fewer offices. Yahoo will continue to have a presence in India and Bangalore remains an important office.”
This has been termed as Yahoo’s second biggest layoff, first being in 2012 when it fired 2000 employees in one single go. 14% of overall staff reduction in 2012 happened under former CEO Scott Thompson.
Why Indian Engineers?
In India, Yahoo operates two separate entities: SDC or Software Development Center and Yahoo India which mainly oversees Yahoo.in web operations, local advertisement services, search and small business sections, targeting India.
Yahoo India has been left untouched, as there is immense growth potential vis-à-vis digital medium in India right now, and they don’t want to hamper that natural growth which Yahoo India is already experiencing in terms of readership and advertisements.
It’s the SDC which is being consolidated right now, as majority of fired employees are engineers who were working here. SDC was mainly formed as an outsourcing unit for engineering tasks. The engineers worked upon concepts of new products and maintenance of existing products catering to global audience. Engineering in India was cheaper and easier to hire, compared to US, and this is the reason outsourcing mainly works.
But it seems that Yahoo is not getting the required output from its SDC located in Bangalore, and have decided to pick the most important persons in its USA office, while firing everyone else.
Here is a description of the firing activities, and the mood at its Bangalore office, as shared by one Yahoo employee:
“All the firing happened in the software development centre of Yahoo and all were software guys. All the software guys on Yahoo India floor were sacked. All of them report directly to their bosses in the USA. When I walked in today, I saw about 30-odd people gathered around and then they were told about it. But most of them have healthy packages (golden handshakes) with some getting five years’ salaries while some got 10 months’ salaries (basic). I fear this firing business will go on for another few days, because they can’t fire so many of them in one go,”
Interestingly, most of the employees have been offered ‘golden handshake’, wherein the company is paying salary of 5 – 12 months, and in some cases 5 years basic salary to its fired employees.
The layoffs are effective November 7th, 2014.
Yahoo had recently acquired Indian startup Bookpad, and the future looked good for its Indian centric operations. This layoff has been announced in the most unexpected times, as their quarterly revenues were improving compared to last year, and things were improving under their current CEO Marissa Mayer. Besides acquiring Tumblr, they have also acquired several startups, and Yahoo is reinventing themselves.
Its not only India where restructuring exercise is on; last month Yahoo had closed it’s San Diego office in USA, thereby terminating 59 employees.
We will keep you updated as more news comes in regarding this huge layoff in India, which, primarily was not expected currently.
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