Xiaomi May Have Fired 900+ Employees Due To Weak Quarterly Results: 3% Workforce Reduced?
Xiaomi has reportedly laid off over 900 employees although this isn’t confirmed yet.
It fired nearly 3 per cent of its workforce amid the economic slowdown.
As of June 30, Xiaomi had 32,869 full-time employees.
Out of this 30,110 were based in mainland China and the rest are located in India and Indonesia.
Missed quarterly target
A key reason behind the move could be a drop in revenue.
It couldn’t achieve the quarterly target and it dropped by nearly 20 per cent in the June quarter.
This is significant since more than half of Xiaomi’s total revenue comes from sales of smartphones which saw a decline of 29% in revenue.
Xiaomi president Wang Xiang said that the industry faced several challenges including “rising global inflation, foreign exchange fluctuations (and) complex political environment”.
His reference to a complex political environment may be alluding to the fact that Xiaomi has faced government investigations in India for allegedly evading tax authorities.
All these have “significantly impacted overall market demand and our financial results for the period.”
Xiaomi’s sales missed estimates and declined more sharply than expected in the previous quarter, when the company reported its first revenue decline since going public.
Year-over-year sales dropped 20% to 70.17 billion yuan ($10.31 billion).
It reported net income that was 67% below analyst expectations at 2.08 billion yuan.
The company said that in the second quarter of 2022, global macroeconomic turbulence and the resurgence of Covid-19 continued to impact overall market demand for smartphones.
Other factors to consider
Another factor is the resurgence of the pandemic in China which has hit demand.
Unfavorable conditions such as rising fuel costs, input costs, and inflation have also dented export sales.
Global smartphone shipments declined 8.9 per cent year-over-year and 7.7 per cent quarter-over-quarter.
Earlier, Chinese conglomerate Tencent fired 5,500 employees, after posting a revenue of $19.8 billion in the June quarter, down 3 per cent which is the first decline since going public.
Several Big Tech companies, unicorns and startups have also been laying off employees en masse due to an unfavorable economic environment.