According to a report from the Economic Times on Thursday, Xiaomi India is said to be reducing its workforce in the country to under 1,000 employees due to increased government scrutiny and declining market share. The report states that the Chinese company laid off 30 employees last week, reducing its workforce from around 1,500 at the beginning of the year.
An unnamed senior executive from Xiaomi India mentioned that the company has implemented a performance improvement plan (PIP) and non-performing employees would be terminated based on this plan. Xiaomi responded to the situation by stating that like any company, their headcount decisions are influenced by market conditions and business projections. However, they also mentioned that they will continue to hire talent as needed.
The Chinese parent company of Xiaomi is reportedly undertaking internal restructuring and making changes to enhance operational efficiency, streamline organizational structure, and optimize resource allocation. This restructuring process has resulted in a gradual decline in the company’s workforce.
Xiaomi India faced a drop in shipments in the first quarter of 2023, selling only five million units compared to the 7-8 million units sold the previous year. This decline caused Xiaomi to lose its position as the top smartphone brand in India, which it had held for 20 consecutive quarters. It is now ranked third, trailing behind Samsung and Vivo, with a market share of 16 percent.
In addition, in June, the Enforcement Directorate, India’s economic intelligence agency, issued show-cause notices to Xiaomi India, its officials, and three banks under the Foreign Exchange Management Act. The notices are related to allegations of foreign exchange violations totaling over ?5,551 crore. The show-cause notices were served to Manu Kumar Jain, the former Managing Director, and Sameer B Rao, the Director and Chief Financial Officer of the company.
Xiaomi India is facing challenges amidst deteriorating relations between India and China. In April, India’s External Affairs Minister, S. Jaishankar, described the ties between the two countries as “abnormal” due to Beijing’s violation of border management agreements.
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