Samsung Electronics is making a significant strategic shift in its Indian operations, announcing plans to lay off over 200 executives—nearly 10% of its managerial workforce—as part of a broader cost-reduction initiative. This move comes in response to a combination of slowing business growth, particularly in its smartphone segment, and heightened competition from rivals.
Strategic Downsizing and Workforce Impact
The decision to reduce its managerial staff reflects Samsung’s need to adapt to a challenging market environment. With around 2,000 executives currently on its payroll in India, the layoffs will affect a range of departments, including mobile phones, consumer electronics, home appliances, and support functions. The company is also pausing new hires and filling vacant positions, which could extend the impact of these cuts to off-roll employees.
Affected employees will receive a severance package that includes three months’ salary and an additional one month’s salary for every year of service. This severance is designed to provide some support as they transition out of the company.
Cost-Cutting and Operational Restructuring
Samsung is responding to pressures from its Seoul headquarters to better manage rising operational costs. This response includes a potential restructuring of its Indian operations, with plans to merge certain business units such as television and home appliances. This restructuring aims to streamline management layers and reduce inefficiencies, though it may lead to further job cuts.
The final decision on this restructuring is anticipated after the Diwali festival, which is a peak sales period for consumer electronics.
Market Position and Competitive Landscape
Samsung’s challenges are particularly evident in the highly competitive Indian smartphone market. The company has recently lost its position as the top smartphone vendor to Chinese competitor Xiaomi. According to Counterpoint Research, Samsung’s market share in India fell slightly to 18.1% during the April-June 2024 quarter, compared to 18.4% a year earlier. Xiaomi now leads with an 18.9% market share, followed closely by Vivo. Despite this decline in volume, Samsung maintains a leading position by value, holding a 24.5% share of the market.
Notable Executive Departures
The company has also experienced key executive departures, including Mohandeep Singh, who was a senior figure in the mobile phone and television sectors. Singh left Samsung in June after 14 years and has since taken on a new role as CEO at Jubilant Agri & Consumer Products.
Ongoing Strike at Chennai Plant
Compounding these challenges is a strike at Samsung’s Chennai manufacturing plant, which has now entered its third consecutive day. The strike, led by factory workers, has disrupted the production of televisions, refrigerators, and washing machines—critical products as the company approaches the festive season. Despite the strike, the plant continues to operate at 50-80% of its normal capacity.
Samsung’s recent moves highlight its efforts to navigate a complex market landscape and address financial pressures. As the company adapts to these challenges, the impact on its Indian workforce and operations will be closely watched in the coming months.
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