The Indian startups have been truly struggling in the past few months and we see the evidence through the massive lay-offs and firing sprees that they have all been on.
As per a report by Business Insider around 8,130 employees have been fired in total till yet by Indian startups. And the numbers seem to be just increasing, as company valuations go down, IPO listings also going down, profits not being made as much as expected and more.
Mass Layoffs By Indian Startups
Vedantu, the ed-tech firm, in the span of a month has let go off around 624 employees, where early in May around 200 employees were fired, another 424 were laid off just last week. Co-founder and CEO Vamsi Krishna in a blog post explained the reason for these mass lay-offs, writing
“There is no easy way to say this – out of 5900 Vedans, 424 of our fellow teammates i.e ~7% of our company, will be parting with us. This has been an extremely difficult call to make, and I want each Vedan to understand why V had to take this call and what it means to you and the future of Vedantu.
Currently, the external environment is tough. War in Europe, impending recession fears, and Fed rate interest hikes have led to inflationary pressures with massive correction in stocks globally and in India as well. Given this environment, capital will be scarce for upcoming quarters.
With COVID tailwinds receding, schools and offline models opening up, the hyper-growth of 9X, Vedantu experienced during the last 2 years will also get moderated. For long term sustenance of the mission, V would need to adapt too.”
Cars24 came under fire recently went it laid off around 600 employees out of its 9,000 total workforce and gave the reason for being that “This is business as usual performance-linked exits that happen every year,” as per a Cars24 spokesperson that spoke to Financial Express.
This excuse was not taken well by many people and there were rumours going around how this is actually due to a cost-cutting measure. However, as per a Finacial Express report “A person aware of the developments told FE that the startup’s decision to lay off employees is part of its “usual” performance-linked review process, and denied that these were due to cost cuts.”
Early in May reports came out of how almost 800 employees from Whitehat Jr had chosen to quit the company after it made work from office mandatory.
A company spokesperson stated on this that “It’s not that they were fired by the company. Some people who joined during the pandemic two years may have their personal reasons not to join office. Some may have kids or families to take care of. The numbers being reported are highly inflated.”
However, many employees were of the view that this was not entirely voluntary. As per an Inc42 report one of the employees who resigned said that “The company was clearly running in losses. This was a cost-cutting exercise to reduce its expenses without ruining their name in the market.”
Another report by Fortune India also commented that “The employees, who are not happy with the new guidelines, are reported to have alleged that it’s a well-managed way of firing them, though the company has denied such allegations.”
Ola has apparently fired a whopping 2,100 contract workers after having steadily laid off employees over the years. In 2020 it fired around 1,400 staff members when it saw a 95% fall in revenue. Now as per an Economic Times report the company has once more cut down on its workforce as a restructuring move.
Status Of Funding In India
The actual reason seems to be the growing concern shown by investors in Indian startups as stated by several reports. That along with the unstable profits being shown by them and the changing climate of consumers have all led to Indian startups making more losses or preparing for them.
As per a report by Business Standard, SoftBank one of the biggest tech investors in India from Japan has seen a whopping loss of $26.2 billion as given by its Vision Fund investment arm. The company has apparently invested more than $14 billion and according to the report “Its founder and CEO Masayoshi Son said that this year the firm may invest only half or a quarter of what it did last year.”
Y Combinator one of the leading Silicon Valley incubators and startup fund has also seemingly told its “portfolio founders to “plan for the worst” as fears of an economic downturn in the US grow” as per the Business Standard report. Y Combinator has investments in more than 150 Indian startups as per sources.
Even Uber CEO Dara Khosrowshahi has commented on a “seismic shift” in investors and how his own company is going to be cutting down on marketing and incentive expenditure and making corporate hiring more of a “privilege”.
One thought to all this could be that the array of creative reasons being used by Indian startups, like creating circumstances that force employees to give voluntary resignation, stating reasons like company restructuring, performance issues and more are just a mask.
A mask to cover up the actual reason which is the lack of funding that is being caused due to the company itself not making as much of a profit as it should be.
What do you think readers? Let us know your thoughts on this in the comments below.
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This post is tagged under: Startups Firing Spree, indian startups, indian startups firing, indian startups mass layoffs, indian startups funding, indian startups funding issues, ola, cars24, vedantu, whitehat jr, ola firing, cars24 firing, vedantu firing, whitehat jr employees
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