The most valued startups of India including Oyo, Ola, and Quikr, have started cutting jobs since the last few weeks, since they were looking forward to reducing costs. This called for anticipations for a tougher financing round in 2020.
Some Stats
To begin with, Quikr has laid off close to around 1000 employees. This is close to about a third of its 3,000 workforce over the last few weeks. It even shut down its beauty service business ‘AtHomeDiva’.
Recently in August, Oyo had shed around 9,000 employees, and it’s even expected to shed 250-500 jobs, as a part of its restructuring of business in India. However, insiders have claimed that the total number could be much higher, with reports pegging it at around 2,000. Earlier the national media had reported that Ola is expected to cut around 15-20 percent of its 5,800-6,000 workforce phases in the upcoming months.
Paytm On The List Too
While the others have been quite functional in the termination process, digital payments platform Paytm too has been proactive. Paytm has fired around 500 employees, as per an online portal. Again, there have been speculations that the layoffs happened with those who were contract workers, and not on Paytm books.
What Are The Biggies Saying?
A Quikr spokesperson has once said that due to the cross-category model, they get a good view of comparative economics of the various categories that they operate in. Based on this, they tried to tweak the operation model in some of their categories, including a change in related market offerings. These kinds of changes have resulted in some workforce rationalisation from their end.
Oyo’s layoffs come at a time when the company plans to re-organise its structure, and also to cut down costs. However, an Ola spokesperson said that they might replace some individuals after they give themselves an opportunity to go through a performance improvement program.
Does SoftBank Have A Role To Play?
There is a significant development in this regard, as all three companies, Oyo, Ola and Paytm, which were backed by Japanese telecom and investment major SoftBank. Oyo has been on an expansion spree to expand globally. It had also announced a $1.5 billion capital raise in October this year. Noida based Paytm said that it had mopped up $1 billion last month. On the other hand, Ola too had raised over $400-500 million this year from investors like Hyundai and Flipkart co-founder Sachin Bansal.
Why Does 2020 Seem Tough?
As mentioned in the article, and like industry experts pointed out too, several well-funded startups have recently stopped hiring over the last few months. This also indicates that the overall funding environment has become cautious. Investors have even pointed out that the belt-tightening around large startups is a fallout of the global scrutiny of high cash burn businesses post We-Work’s failed IPO. This saw the US-based co-working startups valuation fall from $47 billion to $8 billion.
The statistics mentioned above say that employees probably might have a hard time sticking to startups. However, big players like Uber are on the spree of hiring more employees. This is a paradoxical situation indeed.