Snapdeal pay hike: Face-saving gimmick or bid to retain talent?
Photo Credit: Shah Junaid/VCCircle

Delhi-based Jasper Infotech Pvt. Ltd, which runs online marketplace Snapdeal, is reportedly giving out pay hikes of up to 15% to its employees even as talks of its merger with India's biggest e-commerce company Flipkart are fast progressing.

On Wednesday, news agency PTI reported that the pay revision will be effective April 1 this year.

The report said, quoting people aware of the developments, that mid- and junior-level employees will get a 12-15% raise while senior managers will get a 9-12% hike. Exceptional performers will see their salary go up by 20-25%, the report added.

An email sent by VCCircle to Snapdeal, seeking confirmation and comment, went unanswered.

These pay hikes, should they happen, sound like a complete reversal of fortunes for employees of the beleaguered e-commerce firm, which has been in the news for lay-offs, serious cash crunch and a performance that's little to write home about.

Besides, at a time when Snapdeal's merger with Flipkart seems imminent, do these hikes really mean anything?

Says Anshuman Das, managing partner at executive search firm Longhouse, "Snapdeal is good at gimmicks. Their statements have been fairly irresponsible, saying we will overtake Flipkart, we will reach $20-billion GMV, and so on. It is a face-saving effort. They should talk about the future of the company than pay hikes."

"Employees want stability and assurance on what their company is up to. While they may be trying to say 'we are doing fine', the reality is they [Snapdeal] are not. They should address that first," he adds.

Earlier this week, Snapdeal co-founder Kunal Bahl had written an email to employees saying their "well-being" was of prime importance to the management.

Hema Doreswamy, associate professor of finance at Mumbai's Welingkar Institute of Management, says, "The current salary hike doesn’t mean anything if Snapdeal is not showing any signs of recovery from their cash crunch, which depends on how they can rationalise pricing, reduce operational costs and increase market share. But that seems impossible at the moment."

Seemingly, the founders are now more worried about employees than business growth, a complete departure from two months ago when profitability seemed to be the buzzword in the company's corridors.

Some industry watchers, however, feel talent retention during mergers and acquisitions is an important yardstick to measure management's performance.

Sanchit Vir Gogia, chief analyst at Greyhound Research, says, "Following the acquisition by Flipkart, it will be critical for the founders of Snapdeal to retain talent. So, pay hikes are standard. And considering the state of the economy after demonetisation, it is a very good hike. When the market is going at 7-8%, 15-20% is very healthy."

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