Source: Visual China

Xiaomi has started to lay off employees recently and could ultimately cut about 15% of its total jobs, Chinese digital media outlet Jiemian reported on Monday. While the job cuts were made across many departments such as its core business smartphone and internet services, some of departments suffered more than others the media learned from an insider. The source revealed that the highet layoff rate of departments in China reached 75%, namely, three out of four workers at the department were fired, and the division of internet services saw its team had 40% of staff cut.

Jiemian also cautioned the scaled may be even larger as recent news circulated at social media said Xiaomi was estimated to chop 6,000 jobs, accounting to nearly 20% of its workforce. Xiaomi has a total of 35,314 full-time employees and 32,609 of them located in mainland China, according to the financial filling as of September 30.

Many laid-off people felt satisfactory with Xiaomi’s severance package, which offers two more months of compensation for those who work for the company at least a whole year, and if workers have paid annual leave left, they can receive double-time wages each day, according to the abovementioned Xiaomi source. Some employees were said to suspect that the severance could make a sacked staff earn more than those who have their year-end bonuses.  Some fired employees with three years of experience revealed the company compensated seven months of salaries more than they normally worked, the source added.  

Xiaomi didn’t officially comment on the report. A people at the company told The Paper that the layoff scale was much less than the report said. The layoff news came as Xiaomi vowed to further reduce cost following a nearly double-digit decline in revenue.

Xiaomi posted revenue of RMB70.5 billion with a year-over-year (YoY) decrease of 9.7% in the quarter ended September 30, slightly above analysts’ estimated RMB70.16 billion, while revenue from smartphone fell 11% YoY to RMB42.51 billion, missing the market projection of RMB42.79 billion. On the bottom line, Xiaomi surprisingly recorded net loss of RMB14.8 billion that quarter, compared with net income of RMB792.3 million a year earlier.

Cost reduction and efficiency increase is one of the most urgent issues for Xiaomi to deal with until the fundamentals back to positive growth, the president Wang Xiang said at an earnings call last month. Wang said his company is making further plans on how to improve its human efficiency and lower the cost. “We will continue to cut costs and increase efficiency to improve the overall performance next year,” Wang added.

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