The Indian vs Foreign debateIndia’s home-grown technology companies Flipkart and Ola have been long rooting for government intervention and framing policies against what they feel is “capital dumping” by rivals such as Amazon and Uber. Latest to join anti-dumping lobby was Vani Kola, a venture capitalist and Founder and Managing Director of Kalaari Capital. Murthy has aired his opinion against protectionism on various platforms including the Times LitFest 2017, held in Bangalore (February 11–12) where he questioned the viability of the business models of Indian e-commerce companies. According to him, promoters didn’t really care about their businesses and were more interested in taking salaries of INR 300-400 million (US$4.5 – 6 million). “Though Flipkart and Ola claim to innovate in the Indian market, they take eight times the salary of their US counterparts,” Murthy was quoted as saying by online media YourStory. Read More: Are Ola, Flipkart, Uber overvalued? Murthy in fact questioned the Indianness of Flipkart in one of his tweets, were he said: “.@amazonIN is run by India reg. firm. @Flipkart run by Singapore reg. firm. So Singapore co. wants protection against Indian co. In India!:)”
Overpaid underperforming crybabiesMurthy feels that the executives at some of the Indian startups like Snapdeal and Flipkart are highly paid. According to a Quartz India (QZ) report, Flipkart, between April 2015 and March 2016, paid over INR 10 crore ($1.5 million approx) each to six of its employees and over a INR 1 crore each to 101 others. QZ quoted figures from regulatory filings sourced by data platform Tofler. The compensation to these top-paid employees alone takes the company’s remuneration bill to around INR 3,000 million (US$44 million approx). Snapdeal isn’t far behind, which in the fiscal 2016, reported payout rise of 210% year-on-year to INR 6,734 million ($101 million), under the “salaries, wages and bonus” head. Besides salaries and bonuses, Snapdeal’s spending on overall employee benefits increased nearly 150% year-on-year, to INR 9,111 million (US$135.6 million approx), a filing made to the registrar of companies (RoC) showed. In comparison, the two e-tailers’ foreign competition in India, Amazon Seller Services has been frugal in its payouts. Its highest-paid employee in fiscal 2016, in India, has been Stephen Walter, the HR director for India and China; Walter got INR 42.9 million (US$640,000 approx). Amazon’s India head Amit Agarwal received INR 31.6 million (US$471,000 approx). Murthy called out to Flipkart to cut down the salaries of its top executives by 80% if it wants a level playing field with Amazon. He calls Flipkart and its ilk as “Overpaid underperforming crybabies.” downsize its team by around 1,300 employees, a major chunk of which is expected to happen this week. A bunch of senior level executives have already exited the company including Tony Navin, senior vice president of partnerships and strategic initiatives and Abhishek Kumar, head of merger and acquisitions and investments. Read More: What’s ailing Flipkart and Snapdeal the flag-bearers of e-commerce in India Snapdeal last week announced the closure of its consumer-to-consumer marketplace Shopo, and has also now dissolved its SD Instant team, a service launched in 2015 that allowed users to purchase daily essentials for delivery on the same day/next day. In a mail sent out to its employees last week, Kunal Bahl and Rohit Bansal, co-founders of the online marketplace, encouraged teams to take tough decisions in its pursuit of profitability. The communication, which has been reviewed by Times of India, said: “Over a period of time, costs have a tendency to creep up on us and we need to keep an eye on any expense which doesn’t bring us value. It is important to analyze and curtail expenses which are contributing neither to our efficiency nor to the customers’ or sellers’ experience. In the history of every company, there are points of inflection and this is one of those.” Murthy meanwhile had a take on the downsizing at Snapdeal too. He felt that the company would be saving about INR 480 million (US$7.2 million approx).
So @snapdeal lays off 1,000 people. If their salaries average 40k/mth that's a saving of ~48 cr. Which is what each founder's salary is. Hmm— Mahesh Murthy (@maheshmurthy) February 13, 2017