BSE listed Mobile VAS company Onmobile Global is laying off employees in Bangalore, in a bid to become profitable by the end of the financial year (ending 31st March 2015). The new board and management team is narrowing its focus to a few sub-segments of its business, multiple employees have told MediaNama, and it appears that the investor group has taken board and management control of the company.
Sources have told MediaNama that between 180 to 200 people have already been fired, including 90-100 people in the back-end team in Bangalore. Another source, however, put the number at below 100. Multiple sources told MediaNama that the plan is to lay off around 600 people in the next few months, in phases, and downsize the company to 1000 people by the end of December 2014. Rajesh Pandey, Global Head of HR and Abhijit Rao, Sr Manager, HR, at Onmobile both declined to comment.
OnMobile Global issued a statement to MediaNama stating that the company is
“reviewing current businesses and priorities in order to drive increased operational efficiencies. As part of an ongoing business review, the management has identified certain areas where the company can benefit by increasing efficiencies. As a result, we are redeploying resources within the company and eliminating certain redundant positions.
This has impacted certain positions and at this juncture, we can confirm that the number of employees impacted is in the double digits. This is a move directed at increasing operational efficiencies and these changes are not specific to any one function, geography or country.
OnMobile is taking several proactive steps to assist impacted employees. Some of these steps include providing outplacement support, direct introductions to companies that may have a requirement for people with similar skills and appropriate severance packages.”
Note that it has confirmed layoffs, saying that it is eliminating certain redundant positions. The company said that our specific queries regarding changes in strategy and plans for layoffs are “factually incorrect and are based on assumptions and speculations”, but declined (on being asked again) to specify which of the statements, which we’ve been told by multiple current employees, are factually incorrect.
Onmobile employees, on condition of anonymity, told MediaNama that, an “All hands” meeting was held recently in Bangalore, with employees from other locations participating via video conferencing. As a part of the changes, the size of the US team is being significantly reduced, and Onmobile executives that had shifted from Onmobile to the Livewire team in the US have been asked to leave. Livewire had a target of becoming profitable within 12 months, and the business is still in red. Onmobile had acquired Livewire, a competing Caller Ringback Tone (RBT) provider, in June 2013 for $17.8 million. The only teams that are not being impacted are RBT, Contest and Consumer VAS. Scaling down has been significant in the operations and the back-end team, as well enterprise and the team that bids for governance projects. The non-RBT music team – music downloads – has been axed, we were told. The Europe team is also being scaled down, but the Africa operations have not been impacted. Please note, again, that Onmobile has declined to confirm which of these inputs is incorrect.
OnMobile had posted Rs 12.1 Cr loss in Q1-FY15 due to increased content costs in Europe. It had posted a loss of Rs 124.3 crore in the preceding quarter due to writedown taken for Telisma, it’s voice recognition business, and a settlement with Synchronoss, following an IP infringement lawsuit.
Investor group takes over management
The recent changes in Onmobile’s management have been significant:
HH (Tony) Haight resigned as OnMobile Global chairman and board director last week, replaced by Francois Charles Sirois. Sirois is the President and CEO of Onmobile Systems Inc, which is the promoter company of Onmobile Global and its largest shareholder, as well as the President and CEO of Telesystem Ltd. Telesystem Ltd is a Canada based, family owned, media and technology fund. He had been appointed as an additional director to OnMobile board in June this year.
Haight mentions that this resignation is due to his “retirement from a management role with certain investors in the company”. Haight is the founder of Argo Capital that owns 74.7% of the voting share capital in Onmobile Systems. Onmobile Systems had increased its stake to 43.46% in May this year, by buying 11.9 million shares for Rs 47.6 crore.
Charles Sirois (not Francois Charles Sirois) is, according to Argo Capital’s website, a Senior Partner in Argo Capital, and according to the Telesystem website, “the Chairman of the Board of Telesystem, Founder and Chairman of Enablis, Chairman of CIBC Bank and Associate Founder of Tandem Expansion Fund. Over the course of his career, Mr. Sirois led BCE Mobile Communications and Teleglobe as Chairman and CEO. He also founded Telesystem International Wireless and Microcell Communications (Fido).”
In 1992, Telesystem founded Microcell Telecommunications. Rajiv Pancholy, who replaced Onmobile co-founder Mouli Raman as MD and CEO of Onmobile Global this year (see this, this, this, this ) was the President and COO of Microcell Telecommunications between 1999 and 2002, according to his LinkedIn profile.
Other changes at Onmobile
– Rentala Chandrashekhar, an Independent director on board at Onmobile, had resigned in April this year. Barry White had also resigned as OnMobile Global director earlier this month. OnMobile also appointed Nancy Cruickshank and Bruno Ducharme as non-executive Additional Directors in July this year.
– David Fondots, VP and Head of North America operations, had quit the company in March this year. He was replaced by Jacks Sterenfeld in May this year.
– Sumit Sardana, Senior Director and Head Account Management for Europe had resigned from the company in February.
Other developments at OnMobile
– OnMobile wrote down Rs 68 crore from Telisma acquisition in May this year, since the market outlook for the core products in its target markets had apparently deteriorated.
– OnMobile had completed Voxmobili sale to Synchronoss for $26 million in July this year. It also settled an intellectual property violation case filed by Synchronoss, against Voxmobili, Onmobile Global and Onmobile USA LLC, as per which Synchronoss received $3 million from OnMobile.