News: Jabong to witness major layoffs and undergo restructuring

Employee Relations

Jabong to witness major layoffs and undergo restructuring

CEO Ananth Narayanan, denied the rumors of him leaving Myntra and shared that Myntra and Jabong will continue to run as distinct platforms but will be run by one team.
Jabong to witness major layoffs and undergo restructuring

While Myntra will continue to run as an independent company under the leadership of CEO Ananth Narayanan, it will completely integrate Jabong, which will continue as a brand and separate platform. 

This integration of the two fashion brands is set to cost about 200 employees their jobs as both the platforms will be now be run by one team. 

In a town hall meeting, it was announced that about 250 jobs will be cut as Myntra and Jabong are combining functions from finance, technology, marketing and creative teams among others departments. 

Recently, Ananth Narayanan shared, “Since we bought Jabong we’ve been integrating the supply chain and tech. Now we’ve decided to integrate the org (Jabong organization) as well. Myntra and Jabong will continue to run as distinct platforms but they will be run by one team."

He also denied the rumors of him leaving Myntra and said, "I’m definitely going to continue as head of Myntra-Jabong. The market is at a very early stage and our focus is on expanding the market. Of course, it’s been a tough week with Binny leaving but our immediate priority is End of Reason Sale and we remain focused on innovating and bringing the best experience for customers for the sale."

It was in 2016 that Myntra acquired Jabong for $70 Mn from German investors of Rocket Internet after beating other big names like Snapdeal and Future Group. Ever since then, from almost a thousand employees, 300 have exited the firm either after being asked to leave or after finding other jobs, fearing uncertainty at Jabong. Recently, the company also saw two major exits by senior leadership, as Chief Marketing Officer of Myntra and Head of Jabong, Gunjan Soni, and Myntra’s Chief Strategy Officer and Head of Categories, Ananya Tripathi resigned. 

In a recent development, Jabong shared an official statement with People Matters and wrote, “Flipkart Group is deeply committed to the success of Myntra and Jabong as market-leading brands. The just-announced integration of the two brand’s back-office teams is a long-planned and one-off realignment that started since Myntra’s acquisition of Jabong in July 2016. We have no further restructuring plans at this time."

The company's spokesperson added, "We appreciate the work that everyone in the Myntra and Jabong teams has done to transform fashion eCommerce in India. Our decision to combine these teams was not taken lightly, but we believe it is the best way to ensure that both brands can achieve long-term growth and success. We are confident that we can continue to link fashion industry know-how and eCommerce innovation for consumers in India and, increasingly, around the world. And we will continue to invest in the Myntra and Jabong brands and in our people to help make this happen."

Most mergers and acquisitions have multiple rationales, from creating synergy through enhanced capacity utilization, accessing new technologies and market, leveraging economies of scale, distribution channel to cost optimization. However, it has its own negative implications and often costs many jobs to the employees associated with merged or acquired companies. As M&A also implies integration of people and function, HR has a crucial role to play.

As people and communication lie at the heart of successful integration, organizations place significant attention to HR involvement during the “due diligence”. Companies who involve HR upfront stand a better chance to perform better than those who consider HR as a mere “recipient of the deal”. The key HR focus areas include the retention of key talent, building organization capability, cultural audit/integration, managing resistance, restructuring, redeployment and alignment of compensation & benefits.

Here are some articles, case studies and videos that highlight the people challenges that M&As come with and give some tips on how talent can be managed at this stage of transition.  

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Topics: Employee Relations, #MergersAndAcquisitions, #Jobs

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