eBusiness Weekly
Amazon could soon face a tighter market in India, as new government restrictions are set to kick in next month. But the company remains undeterred in its India expansion based on at least one measure: job openings.
Amazon currently has 660 open positions in Bengaluru (formerly known as Bangalore), which is the second most worldwide after Seattle. The southern city of Hyderabad has the eighth-most with over 450 job openings, according to its career site. That also means India has two of the five non-US markets with the most Amazon job openings.
Although India has traditionally been a popular recruiting site for IT talent and back-end customer service jobs, many of the current openings are for Amazon India’s retail and marketplace positions. For example, of the job openings in Bengaluru, 194 of them specifically mention “Amazon India,” including 65 retail positions and 24 marketplace roles.
The job numbers are the clearest sign yet of Amazon’s continued focus on India, even as it faces new regulations that could challenge its business in the country. The new rules, announced last month and going into effect on February 1, prevent foreign online retailers — like Amazon — from selling products through affiliated companies they own a heavy ownership stake in, or from offering special discounts and exclusive deals in the country.
Amazon has reason to keep up its hiring spree in India. The company has already poured roughly $5 billion into the market, while it is reported to have plans for an additional $2 billion investment in Amazon India. Amazon has also been making inroads into India’s offline space, buying equity stakes of local store chains like More and Shoppers Stop.
On top of that, Amazon is in a fierce battle with Walmart-owned Flipkart over India’s sprawling e-commerce market, which is considered one of the fastest growing in the world. India is expected to grow into a $72 billion e-commerce market by 2020, more than doubling from last year’s $32,7 billion, according to eMarketer. Amazon is in a “neck and neck” position with Flipkart in India, having sold roughly $7,5 billion worth of products in India last year, Barclays estimates.
“All of this requires a lot of talent hiring and employee expansions which explains the job numbers,” said Anindya Ghose, a management professor at NYU.
In a statement to CNBC, Amazon’s representative said it sees India as a strong “talent location” and that it has been hiring for roles across the company both in India and globally. But it also said that it’s currently “evaluating” the new rule changes “to gain clarity so that we remain true to our commitment”.
‘Too soon to tell’
In India, foreign online retailers are not allowed to sell products on their own. To stay within the law, foreign companies like Amazon have partnered with or bought significant ownership stakes in local sellers, who in turn, are able to offer steep discounts and exclusive deals on Amazon’s Indian marketplace.
Sellers like Appario and Cloudtail, both created through joint ventures between Amazon and local investors, are considered some of the largest sellers on Amazon India.
But the new rule changes mean Amazon will have to change the legal structures of sellers like Appario and Cloudtail. Also, Amazon will no longer be able to offer exclusive deals for certain hardware and private-label products.
“This will certainly impact the investment plans of Amazon in India,” said Satish Meena, an analyst for Forrester Research.
“Some parts of Amazon will face challenges, and if the Indian operations take a step back in scaling, we can expect some change in their jobs scenario also.”
Amazon will also need more clarity from the government on how exactly the new changes will affect their business, said Kartik Hosanagar, a professor at the Wharton business school. There’s been a lot of debate on how to best interpret the new rules, particularly around discounts and exclusive offers, which have been important levers for Amazon to gain market share.
“It’s simply too soon to tell,” Hosanagar said.
The upcoming national elections, scheduled to take place in May, are another wildcard. If a new government were to come to power, the regulatory changes could get overturned, taking things back to how things were before, according to NYU’s Ghose.
“They will wait to see how the elections unfold and then make a call,” he said. — CNBC.
