AOL plans to fire about 500 of its 750 employees in Bangalore India, a reader tells us in a detailed, if unconfirmed note.
The email makes enough sense that it is worth passing on.
AOL is, afterall, planning some layoffs following its $315 million acquisition of the Huffington Post.
In a filing with the SEC following the acquisition, AOL announced that it expects “restructuring charges” due to “cost overlap” to total $20 million in 2011.
We’ve reached out to AOL PR to confirm its details, and will update this post if and when we hear back.
In the meantime, here’s the note. Read it with a grain of salt:
AOL plans to layoff engineering, operations and editorial positions at Bangalore over the next 4 months.The layoffs have been completely directed by Alex G and Jonathan Thompson (JT), after their recent visits to Bangalore during October and December, 2010. Both were particularly interested to “close” the centre, to ensure jobs were retained at Dulles, without realising the legacy applications impact and talent that’s required to enable transition. They also are particularly “anti-India”. The Bangalore executive management team had very little decision making authority on the number of people to retain and priority of projects to execute. A US executive team will be arriving on Mar 14 to “manage” the layoffs. They include Alex G, JT, Bill McGrath, Kathy Andreasen, and some HR representatives. Despite repeated attempts requesting TA to address the Bangalore office, he declined and was forced to comment during the paidContent conference since the layoffs (read “overlaps”) are affecting all locations. This comment was “forced” after an executive level email exchange with his directs and the PR team. Atleast TA stated that the matter was “delicate”. The “responsibility” that Alex has tried to “get” is ensuring all “unique engineering work” at Bangalore is moved to Dulles, so that he can keep his job. He found the “overlaps” opportunity as the most appropriate event.
The business units that got affected are AOL Media (Technology, Editorial, Photography) , AOL Paid Services and Consumer Applications Group, AOL Advertising and Search (Technology and Operations) and AOL Tech Operations (Tech Ops, NOC). The number of layoffs are pegged at approx. 500 people. The current organisation at Bangalore has around 750 staff, which includes 50 contractors. Staff who are affected by March 31st have been told on March 1st and 2nd. The Bangalore management team have been conducting close door conversations with all affected team members. The layoff structure proposed at approximate numbers are:
100 – March
100 – April
150 – May
150 – June
The severance packages currently being discussed, would be at around 2-3 months pay with some benefits. Most staff have been advised to wait till the severance packages are announced before jumping ship. The AOL Tech Operations teams will be merged/absorbed with a successful bidder and work with AOL on a contract-outsourced model. This will enable the successful bidder to “hit the ground running”, and less impact on teams. The current bidders for these groups are Infosys, MindTree, TCS and ITC, which are all India based IT Services companies. Once outsourced, AOL will have a significant cost advantage. The winning bidder is expected to be announced post Mar 15. However, even after this strategic move, certain employees of these teams will be let go.In addition to all this, key leadership at Bangalore have been in talks with other Product organisations who have expansion plans (viz. Intel, Cisco, ) to see ability in absorbing groups as-is. Over the last 48 hours, Job Agencies have been flooded with resumes of potential candidates along with other IT companies looking to hire and “poach” the strongest engineers.
This puts AOL at a precarious position after having a formidable presence in Bangalore over the last 7 years with competition in the same bloc (Google, Yahoo). The talent that’s heading the door have such excellent reputations across the Web Technologies domain, so much that a down the line “revival” of the Bangalore office will be futile. From “overlap” with the HuffPo acquisition, the only teams that really were redundant were AOL Media and the Editorial Teams and didn’t warrant such a huge shutdown. Some SVPs have voiced concerns over the layoffs and have ensured their teams are least impacted. Over the last two days JT himself has been trying to keep some his teams “less impacted” and active, after realising unique projects are being executed at Bangalore. Eventually the layoffs number may reduce, however may be too late, since intentions to “close” have been very clear and employees are looking to exit.
The likely teams to remain are Business Development supporting AOL India Mobile and AOL Japan. AOL India Mobile have launched a product in India called Coolage, which TA spoke during the recent internal employee call as a “full product for the Indian market”. The Coolage team (pronounced Cool – age – like college) is currently running campaigns with Colleges to promote the product. A cursory glance will show you just pictures of students and colleges in a grid layout. The product has been touted by Aaron Sears around the company and is trying to ensure cash flow through SMS services.
ROI for AOL (Technologies) will hit rock-bottom by Q4 of 2011, with this layoff, since most positions are being re-opened in Dulles and will be at high-cost engineering. This would inadvertently hit the bottom line revenue, which is in an already declining state. The ratio of engineering to management have been 1:15 at Bangalore, against 1:7 at Dulles. A significant increase in hiring at the US side to support the Bangalore transition would cause an uptick in cost. With AOL already struggling to maintain CPM rates, and costs set to increase, this can only mean more decline in the revenues for products.