Samsung Planning Major Workforce Cuts

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Korean giant plans staff cuts in its back-end workforce in the face of increasing smartphone competition

Samsung is reportedly planning to cut as much as 10 percent of staff at its South Korean headquarters.

The world’s biggest smartphone maker is under increasing pressure due to a slump in the mobile device market and competition from Chinese vendors, as well as its principle rival Apple.

Staff Cuts

Samsung003-3173028134-OAccording to the Korea Economic Daily newspaper, Samsung has recently begun a downsizing program focusing on back-office staff employed in departments such as finance, personnel, and public relations.

Samsung is apparently encouraging voluntary retirement or transfer to other affiliates through personal interviews with personnel department managers.

The newspaper, citing unnamed sources, said that Samsung is also cutting back on general expenses by 50 percent next year, in a pre-emptive move because of the ongoing slump in the smartphone market.

And it seems that Samsung also feels the need to cut back on the number of senior manager level salaries, as the South Korean government seeks to raise the legal retirement age to 60 from next year. In the private sector in South Korea, the usual retirement age was 55 years years old.

“Cutting jobs is the easiest way to control costs and Samsung’s spending on mobile business could also be more tightly controlled,” said Chung Chang Won, an analyst at Nomura Holdings was quoted as saying by Bloomberg. “Samsung’s preparing to tighten its belt as it isn’t likely see rapid profit growth in the years to come.”

Smartphone Fightback

Samsung Galaxy S6 Edge+ (7)There is little doubt that Samsung is exploring ways to bounce back from a series of disappointing financial results.

In July for example it warned that its quarterly earnings were likely to miss analysts’ expectations because its flagship Galaxy S6 smartphone failed to reignite the smartphone market.

This sales disappointment came after lacklustre sales of last year’s predecessor, the Galaxy S5.

And Samsung has also said it will slash the price of both the Samsung Galaxy S6 and Galaxy S6 Edge in an effort to kickstart sales.

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Author: Tom Jowitt
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