An India TechOnline Special analysis
Bangalore, October 8 2014: Internet company Yahoo is laying off its most valuable asset -- the innovation and intellectual property that the 500-strong team of engineers at its Bangalore, India-based Software Development Centre provided for more than a decade.
For twenty four hours now, social media has been ablaze with anxious posts by Yahoo employees in India who they say, have been asked to leave the Internet firm by November 1. A small number -- less than 5 % say insiders -- have been offered jobs in the company's Sunnyvale, California headquarters.
This will practically wind up Yahoo's India R&D -- its largest outside the US - and the source of a lot of innovation in the mobile area that targeted emerging economies. Now, only support and operations functions will seemingly be carried out in India. With one savage stroke, Yahoo which was among early comers to India for its software skills, has destroyed the very rationale that persuaded technology MNCs to set up an R&D unit in India.
Ironically the downsizing that affects only India at this time comes only days after Yahoo become wealthier by some 5 billion dollars -- the money it stood to earn when it sold 121.7 million shares it held in its former Chinese partner, Alibaba, which just launched a very successful IPO in the USA.
The company has not confirmed the extent of its layoffs in India except to issue a bland statement couched in the hocus pocus that has become a characteristic of tech MNCs when they avoid breaking bad news: " 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...." Yeah.
Some of its Ali Baba money will doubtless be used finance its first India acquisition-- Bangalore-based file editing software maker Bookpad.
The drastic wipeout of Yahoo's Indian development face may flow from CEO Marissa Mayer's somewhat unconventional take on such matters. Yahoo's CEO since July 2012, is known to disfavour development that takes place at multiple centres and prefers a more centralized approach. This is consistent with her decision in 2013 to stop policies like 'work from home' and flexible hours and mandate a more rigid, if outmoded work ethic for the company.
Whatever the logic, I cannot help feeling a tinge of sadness that such a large number of skilled Indian engineers (the number given the chop is speculated to be anything from300 to 2000, but we prefer to make a more conservative estimate) who contributed so much to Yahoo's product portfolio over the years are now being let go with nary a hint of regret. In happier times I joined the annual events at Yahoo India when the company's co-founder David Filo, invariably flew down from the US, to listen and learn as his India team of engineers competed in a day long hack to come up with the brightest, most innovative ideas. I don't think Ms Meyer has found the time to visit her Indian outpost of creativity. Now ofcourse it would be pointless.
When HP announced its split intotwo companies, yesterday and analysts put the consequent number of layoffs at 5000, totaling some 55,000 in recent years, a commentator at Bloomberg added the interesting aside: "The bigger the layoff, the bigger (CEO) Meg Whitman's bonus package". Is this standard industry practice in the US? I don't know.
But I'm guessing the problems of a few hundred Indian engineers who chose to work for what they thought was one of Internet's brightest stars, doesn't amount to a hill of beans in this crazy technology-business world. No worries guys! I give it a week before every one of you geeks will be snapped up by one of our own home grown, desi, innovative startups. Yahoo will pay the price for dumping its crown jewels -- sooner rather than later.