Chinese smartphone manufacturer Xiaomi is reportedly reducing its workforce in India as part of an organizational rearrangement. At the beginning of this year, the company employed around 1,400 to 1,500 individuals, a number that will be brought down to below 1,000.
The company has already terminated the contracts of 30 employees, with further layoffs expected in the near future. This decision comes as Xiaomi has faced challenges, including a declining market share and increased scrutiny from government agencies.
According to reports, the restructuring plans and decision-making authority lie with the Chinese operations of the company. Xiaomi India stated, “As with any company, we take headcount decisions based on the market’s state and business projections.” However, the company also emphasized that it continues to hire talent as needed.
Initially, the affected employees will be placed under a performance improvement plan (PIP). Based on the outcomes of the PIP, some employees may face layoffs.
Employees speculate that business decisions made by the Chinese counterpart are impacting market share and business profitability in India.
The announcement comes weeks after the Enforcement Directorate issued a show cause notice to Xiaomi as part of an investigation into alleged illegal remittances. The notice was directed at the current chief financial officer (CFO) Sameer Rao, former managing director Manu Jain, and three banks under the provisions of the Foreign Exchange Management Act, 1999.
The Enforcement Directorate also issued notices to Citibank, HSBC Bank, and Deutsche Bank AG for allegedly allowing Xiaomi to send remittances overseas disguised as royalty without proper due diligence.
Ironically, Xiaomi had recently announced plans to increase its smartphone production in India through a partnership with contract manufacturer Dixon Technologies, signaling a move toward “Make in India” initiatives.
In a related development, another major Chinese smartphone player, Realme India, faced a setback with the resignation of its Vice President and CEO, Madhav Sheth. Realme founder Sky Li has assumed leadership of the Indian operations, while Sheth will continue to serve as a strategic advisor for global product observations, market insights, and operations.
