Global economic crisis and resulting economic downturn has put pressure on companies around the world. Tech companies, which are often seen as more resilient to economic challenges, are also feeling the effects of rising costs and inflation. As a result, we are seeing more and more tech brands announce layoffs as a means of cutting costs and weathering the storm. One of these companies Xiaomi, is reportedly preparing to join these brands with plans to lay off thousands of employees.
Xiaomi faces layoff rumors as economic pressures continue
Xiaomi is reportedly undergoing a round of layoffs, with multiple departments reportedly affected. According to sources at the company, the scale of the layoffs is significant, with the smartphone, internet, and China divisions all experiencing job cuts, though the extent of the layoffs varies by department.
Some departments have reportedly seen layoffs of up to 75%, while others have had around 40% of their teams cut. The overall scale of the layoffs has not yet been confirmed, but it is estimated to reach 15%. Affected employees are reportedly receiving N+2 compensation, which includes double pay for unused vacation days.
The news of the layoffs comes as Xiaomi’s financial performance has been under pressure this year, with adjusted profits for the first three quarters coming in at 28.6 billion yuan, 20.8 billion yuan, and 21.2 billion yuan, far below the single-quarter levels of 50-60 billion yuan in 2021 and representing YoY declines of 52.9%, 67.1%, and 59.1%, respectively.
As a result, the company may be looking to cut costs by reducing its workforce. As of September 30, the company had 35,314 full-time employees, with 32,609 based in mainland China. It remains to be seen how the layoffs will impact the company’s operations and performance going forward, and how it will continue to compete in a crowded and highly competitive market.
The overall strength of this round of layoffs is not yet clear, according to estimates or up to 15%. Previously, there is news that Xiaomi plans to lay off a large number of employees to reduce labor costs, and estimates that the number of layoffs in this round will reach 6,000. It should be noted that there is no official statement about the layoff yet, therefore, we must also consider that the allegations may be unfounded.
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