The trophy of Indo-Finnish partnership, Nokia's Chennai plant -the biggest cellular phone manufacturing location in the world -will cease to produce phones and may down shutters after November 1 as Microsoft, its lone customer, terminated a subcontract agreement. The factory , assets of which were frozen by tax authorities, will move to the Central Board of Direct Taxes as Nokia only had an operating licence after the Kancheepuram tahsildar attached it due to non-payment of taxes. The Chennai plant, launched with great fanfare with the `Made for India' Nokia 1100, has stopped production just nine years after it opened. Nokia had announced sale of its handset business, including its Sriperumbudur plant, to Microsoft for 5.4 billion last year. However, at the time of deal closure, the Chennai plant was left out as several tax disputes had surfaced.
A Nokia statement said it was evaluating options to minimize the impact of the closure on the 900 employees. The deadline for the deal was March 31, which was extended to April 2014. Several cases and tax disputes surfaced after the deal with Microsoft was announced, and the Sriperumbudur plant was left out of the deal. Nokia ran the plant as a contract manufacturer for Microsoft for one year.
“Microsoft has informed Nokia that it will be terminating the manufacturing services defined in the agreement with effect from November 1, 2014. In absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from November 1,“ a statement from Nokia said.
Nokia has also said it would inform all stakeholders, including the labour commissioner, of the development. It now has nearly 900 employees on its rolls. “As a responsible employer, Nokia is currently evaluating options to minimise the impact on existing employees at the manufacturing facility. It will share further information once details have been finalised,“ the Nokia statement said.
Established in 2006 on a 200 acre site, the Nokia facility in Sriperumbudur slowly ramped up production to make the plant the largest single location for mobile handsets globally.
Along with half a dozen component suppliers the Nokia special economic zone (SEZ), in Sriperumbudur, 40 km from Chennai, employed more than 31,000 people directly and provided scores of indirect jobs. The SEZ became a hotbed for electronics manufacturing services with a number of component suppliers setting up shop. In no time, the area was a beehive of activity as Nokia kept boxing and shipping phones to the world. Nine years on, the same facility faces closure.
So, what went wrong? You could say Nokia was ambushed. At the top end came the smartphone revolution with the iPhone launch in 2007.Quickly , fortunes were reversed and the giant of the previous era, Nokia, was fighting for survival, while the upstarts in the phone business--Apple and Google--stole the thunder.At the other end, when the Indian market migrated to dual SIM phones, Nokia was seen wanting for models. It did not have a product in this segment even though dual SIM phones accounted for 70% of the low-end phone market space at the time.
Faced with falling revenues, the business was sold to Microsoft in September last year. The company now faces Indian tax claims to the tune of Rs.21,000 crore, which ultimately resulted in the factory being not transferred to Microsoft as its sale was frozen.
When the deal with Microsoft did not come to pass, Nokia announced a severance package for workers and all but 900 opted for an exit. A back-of-the envelope calculation suggests that an employee who completed six years with the company would have got around Rs 6 lakh as part of the separation package. Nokia sweetened the severance package with its `Bridge' programme by working with industry experts to identify new employment areas for its employees. It helped employees to develop skills based on their areas of interest.
For years, Yahoo had been building up its Bangalore operations as one of its global technology centerpieces. Now, in a radical restructuring, the internet company is pulling back work to its Sunnyvale, California, headquarters, and laying off large numbers of its employees in Bangalore.
Yahoo declined to talk about the numbers being retrenched, but sources in the company and others close to the company said some 300 out of the 800-odd developers were being asked to go. Some have been asked to relocate to Sunnyvale. Affected employees started getting their intimations on Tuesday.The laid-off employees have been offered a six month severance package.
Those asked to relocate to the US but unwilling to do so have been offered a 12-month severance package, sources in the company said. There was much speculation on Tuesday that the entire Yahoo India R&D operation was being shut down. That may be an exaggeration. Yahoo India issued the following statement: “As we ensure that Yahoo is on a path of sustainable growth, we're looking at ways to achieve greater efficiency, collaboration and innovation across our business. To this effect, we're making some changes to the way we operate in Bangalore leading to consolidation of certain teams into fewer offices. Yahoo will continue to have a presence in India and Bangalore remains an important office.” Early last year, Yahoo had over 2,000 of its then 11,500 employees in India.
Since then, various pieces of work have been pulled back to the US, and the India numbers have consequently been dropping. Yahoo no longer discloses its India headcount, but some believe it is down to 1,500 or less. This includes engineering staff, editorial content developers and sales and support staff. Yahoo’s advertising platform team was one of the largest teams here that was scaled down and eventually moved back to the US.
In the latest move, some of the other core engineering work is also being moved back to the US. A number of Indian technology start ups lost no time in wooing Yahoo engineers being laid off. Several of them went on social media with job pitches. Deepinder Goyal, co-founder of restaurant search engine Zomato, had this tweet: “Yeah Who? Zomato is hiring across all tech positions.“
Rishi Khiani, CEO of innovation sandbox Ant Farm, tweeted, “Hiring developers for AntFarm.in, we have over 100 open positions. So please pass this on to any Dev's over at Yahoo that just got slipped.“
Ankur Agarwal, cofounder of PriceBaba, had this blog post: “Dear Engineer, I am sad to see that Yahoo is leaving so many talented engineers in India (from what I hear) in a bid to consolidate its development efforts. Like any other growing tech startup, my instincts reacted in the same way as it did for a lot of my friends on Twitter.Can we get some good engineers to join PriceBaba?“ Vijay Rayapati รพ, CEO at Minjar Cloud Solutions, tweeted, “Impacted by @yahoo India layoff ?
@minjarcloud is hiring engineers for product engg roles. Drop a note to careers at http:minjar.com.“
Others suggested a different opportunity for Yahoo engineers. Maruti Borker, co-founder of Vauntz.com and hurricaneviz.com, tweeted: “Hope some startups come out of the Yahoo! India layoff :P 610 months salary is a nice seed fund.“
The short message for Yahoo engineers: There are plenty of jobs available within Indian startups.Many are starved of talent.
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