The COVID-19 crisis has had a negative impact on the Indian economy and the job market. The Indian startup ecosystem, which is the third-largest in the world, has not been spared from it either.
According to a survey conducted by Nasscom, 70 percent of startups have less than three months of cash runway. The industry body’s month-long e-survey, which was conducted to study the impact of the COVID-19 pandemic on Indian startups, found that around 40 percent of startups have either temporarily shut down operations or are on the verge of shutting down.
Startups across sectors – from cab aggregators and foodtech to hospitality and travel – have been facing umpteen number of challenges to sustain their business in terms of cash liquidity, getting funds from investors, etc. The last few months have seen a visible dip in the investments, and startups have been struggling with their residual cash flow.
As a result, several startup employees have been rendered jobless, while others have been asked to go on temporary leave or furloughs, with founders and CEOs foregoing their salaries as businesses try to make up for the revenue shortfall.
YourStory lists some top startups that have trimmed headcount to sustain the impact of the coronavirus crisis.
Raid-hailing unicorn Ola said last month that it will lay off 1,400 employees due to the worsening situation, even after its senior management had already taken significant salary cuts to avoid such a situation.
The company did not specify which positions or departments would be culled, but said it would be the last time any COVID-19-related job cuts would be made.
Bhavish Aggarwal, Co-founder and CEO of Ola, in an email to employees, said: “Ever since my last email to you six weeks ago, I had hoped to write again soon in better times. Unfortunately, the COVID-19 crisis continues to unfold all around us, causing unprecedented economic and social destruction. It has also become evident that the coronavirus crisis will not be eliminated any time soon. We will rather have to learn to live with the virus and resultant implications.”
Ola’s revenue fell by nearly 95 percent over the last two months, the company said, prompting it to look for ways to conserve cash aggressively. The company was allowed to resume its services in 160 cities in mid-May.
In an email to employees in May, foodtech unicorn Swiggy’s Co-founder and CEO, Sriharsha Majety, announced the company will be downsizing and reducing costs.
Sriharsha said: “Today is one of the saddest days for Swiggy as we have to go through an unfortunate downsizing exercise. With a heavy heart, I have tried to share the reasons and details of the process below, because you deserve to know. In line with the above business decisions, we, unfortunately, have to part ways with 1,100 of our employees, spanning across grades and functions in the cities and head office over the next few days.”
The mail said all impacted employees will receive at least three months of salary, irrespective of their notice period or tenure.
The foodtech startup is also working on a healthcare plan. Swiggy said it will provide medical insurance cover for employees who have lost jobs and their families till December 31, 2020, and will also provide insurance cover for their parents till December 31, 2020.
Swiggy is also working to ensure a smooth career transition and providing necessary career support for the next three months for the impacted employees.
In a recent interaction with YourStory, Curefit co-founders Mukesh Bansal and Ankit Nagori had confirmed that 300 trainers, mostly access staff, who were hired for future extension from smaller towns, were laid off.
“Close to 90 percent of our trainers are still with Curefit. We are, in fact, committed to keeping them on the payroll for the foreseeable future while we ride off this crisis. We are also supporting them in all ways possible. While there is a change in their compensation models, it has been done to ensure that we are well set to ride this crisis out in the long term”, said Mukesh.
He further added, “Even for the trainers who have been laid off, we are giving them two months of severance and two months of salary. We are also providing them with health insurance for an extended period of time and a separate emergency fund, which they can tap into.”
After Uber laid off 3,700 of its workforce via a Zoom call in mid-May, the ride-sharing firm announced its second round of layoffs in two weeks, cutting 3,000 more jobs.
“Uber will be re-focussing on its core business, moving people and delivering food and groceries,” said CEO Dara Khosrowshahi in a note to employees.
The ride-hailing giant will be closing or consolidating 45 offices globally, and almost all departments will be affected by layoffs. The company is closing its incubator and AI labs, and will pursue strategic alternatives for its job recruiting app, Uber Works, Khosrowshahi said.
Gurugram-based food delivery unicorn Zomato has announced a 13 percent reduction of its workforce along with salary cuts as coronavirus has had a severe impact on the company.
Zomato Founder and CEO Deepinder Goyal, in a note to employees, said, “Multiple aspects of our business have changed dramatically over the last couple of months and many of these changes are expected to be permanent. While we continue to build a more focussed Zomato, we do not foresee having enough work for all our employees.”
According to Deepinder, the lockdown has severely affected its business, with a large number of restaurants shutting down permanently, and he expects this to shrink further by another 25-40 percent in the next six to 12 months. However, he said the affected employees will continue to receive support from the company in terms of financial, outplacement support, healthcare, and equity.
The company said employees who have lost their jobs will continue to receive 50 percent salary for the next six months.
On April 8, OYO Founder and Group CEO, Ritesh Agarwal, had said in a letter and video message that the company will place a certain number of employees on furloughs or temporary leaves, globally.
The unicorn said that as global occupancies continue to reduce in the hospitality industry, furlough (in markets like the US) or temporary leaves in select other markets will give OYO the opportunity to do what is right for the business, while ensuring employees are safeguarded against a potential job cut.
In a press statement, Ritesh stated: “While taking these necessary and tough decisions in the interest and health of the business and its long-term sustainability across markets world over, we assure we are not considering job cuts at any location at this time, despite the significant economic pressure.”
On June 1, the company announced that it is granting employee stock ownership plans (ESOPs) worth around Rs 130 crore to all its furloughed employees impacted by the COVID-19 pandemic as part of its efforts to minimise the disruption being experienced by them.
“I would like to recognise your contributions and this love and passion for OYO by making you a co-owner and shareholder of the company. I would like to inform you that all impacted OYOpreneurs would be eligible for ESOPs worth around Rs 130 crore (around $18 million),” said Ritesh.
Bengaluru-based home design and renovation startup Livspace has laid off 450 employees due to the adverse impact of the lockdown.
“About 15 percent of the organisation have been impacted due to this decision, which was the last resort for us,” Livspace said, adding that it was an extremely difficult decision.
In April, its founders gave up their annual salary, the leadership team relinquished their annual bonuses, and the company introduced success-based variable pay across the board, it said.
Livspace said the company will provide health cover to these 450 employees and their families for the next three months.
Online travel firm MakeMyTrip has laid off 350 employees due to the impact of the COVID-19 pandemic.
In an email to employees, MakeMyTrip Group Executive Chairman and founder Deep Kalra and Group CEO Rajesh Magow said even as times remain unpredictable, what is evident is that the impact of COVID-19 crisis is going to be long drawn for the company.
“Keeping this in mind, we have had to take this sad but inevitable decision of rightsizing our workforce in these businesses,” Kalra and Magow said.
Online ticket booking platform BookMyShow has laid off or furloughed 270 employees as it expects its revenue to be ‘greatly reduced’ in the coming months, hit by the COVID-19 pandemic and lockdown.
“…we have had to resort to the task of reducing our costs to align them with what we believe will be greatly reduced revenues in the months to come…out of 1,450 employees at BookMyShow in India and globally, about 270 employees across various functions and teams will be impacted through this exercise,” said CEO Ashish Hemrajani, Founder-CEO, BookMyShow, in an email to employees.
Ashish said the teams that are staying back have voluntarily taken salary cuts ranging from 10 percent to 50 percent at the leadership level, given up their bonuses and salary raises. He said the company has tried to do its best to offer financial support, continued health insurance cover, and outplacement support for those impacted by the downsizing exercise.
Online auto classifieds portal CarDekho has also laid off employees and slashed salaries as it looks to tide over the disruptions caused by COVID-19 pandemic that has badly hit the Indian auto sector.
Girnarsoft Group, which runs Car Dekho, said in an email statement: “We were constrained to look at rightsizing and salary cuts in a few businesses given the period of slow recovery, and in some cases a permanent change in the pattern of consumer spends.”
While the company did not comment on the number of employees being laid off, reports suggest the number is as high as 200.
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