Why did Flipkart lay off around 500 employees? Job cuts follow annual performance review, report claims

Flipkart has reportedly fired about 500 workers after its yearly review. This shows that the company is trying to save money and work more efficiently to make a profit.

Flipkart has asked around 400-500 employees to quit following performance reviews. Employees who were asked to leave apparently had the lowest ratings in the annual exercise. Reports state that Flipkart, India's most valued startup, has asked some employees to leave after the performance reviews. The exits have come in light of the yearly performance review practice at the company. However, there have been slightly more exits than normal this year.

Numerous startups and tech companies have been focusing on cost-cutting measures and optimising efficiency as of late.

Performance Reviews Result In Layoffs

Roughly 3-4% of Flipkart employees have been asked to leave the company. The Bengaluru-headquartered company usually lays off around 1 2% of the lowest performers every year.

However, this year, Flipkart put more employees on performance improvement plans, or PIPs. A source close to the development claimed that employees with the lowest ratings were then asked to leave Flipkart.

Flipkart recently conducted its annual appraisal and performance review cycle. The yearly process to review employee performance usually happens in the first quarter of the year.

Flipkart issued a statement on the development. "Evaluating performance against clearly defined expectations is a normal course of business at Flipkart. At the end of such reviews, a small percentage of employees may choose to leave the organization and where that's the case, we support them with transition benefits," the company added.

Companies often offer placement support, severance packages, and other benefits to employees who are asked to leave.

Also read: Zomato to Flipkart to Physics Wallah: Indian startups which were founded by best friends with minimal capital but now have a turnover in crores

Aim To Optimize Efficiency

This move by Flipkart indicates that tech companies are under immense pressure to save costs and become profitable. Startups and tech companies have been undergoing layoffs over the past few years. While companies expanded rapidly, they have been looking to cut down costs and optimise efficiency.

The e-commerce industry is expectedly highly competitive in India. While firms expand and look to capture more market share, they are also expected to please investors by becoming profitable.

Layoffs Become Common In Tech

Of late, layoffs have become common in the tech industry. In India and around the world, companies have let go workers and trimmed their workforce. While conducting performance reviews, companies have been using them as an opportunity to let employees with low ratings go.

Flipkart is one of the largest e-commerce companies in India. The firm continues to lead in the online space but has laid off a significant number of employees over the years.