These Startups Have Fired 7000 Employees: Ola, Swiggy, Uber, CureFit, Zomato, Oyo & More
The COVID-19 pandemic resultant lockdowns has had a negative impact on the economy and the startup ecosystem. The Indian startup ecosystem is the third-largest in the world.
According to a survey conducted by Nasscom, 70% of startups have less than 3 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% of startups have either temporarily shut down operations or are on the verge of shutting down.
Read to find out more…
Indian Startups In A Ditch!
From foodtech and cab aggregators to hospitality and travel – many startups have been enduring countless challenges to sustain their business in terms of cash liquidity, getting funds from investors, etc. The last few months have seen a substantial drop in the investments, hence the startups have been struggling with their residual cash flow.
As a result, several startup employees have been handed pink slips, while others have been asked to go on temporary leave or furloughs. The founders and CEOs are also foregoing their salaries as businesses try to make up for the revenue shortfall.
Lets see how the startups are tiding the COVID-19 crisis…
Last month, In an email to employees the foodtech unicorn Swiggy’s Co-founder and CEO, Sriharsha Majety, announced the company will be downsizing and resorting to cost-cutting. 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 3 months of salary, irrespective of their notice period or tenure. Swiggy is also working on a healthcare plan. The food tech startup 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. It is also working to ensure a smooth career transition and providing necessary career support for the next 3 months for the impacted employees.
Another food delivery unicorn, Zomato has announced a 13% reduction of its workforce along with pay cuts as coronavirus reduced the number of food deliveries substantially.
In a note to his employees, Zomato Founder and CEO Deepinder Goyal 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 Goyal, the lockdown has severely affected the business, with a large number of restaurants shutting down permanently, and he expects this to shrink further by another 25-40% in the next 6 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 also said employees who have lost their jobs will continue to receive a 50% salary for the next 6 months.
Ride-hailing unicorn, Ola’s revenue fell by nearly 95% 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.
The cab aggregator, Ola said in May 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 witness job cuts, but said it would be the last time any COVID-19-related job cuts would be made.
In an email to the employees, Bhavish Aggarwal, Co-founder and CEO of Ola 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.”
Similarly, the cab aggregator Uber laid off 3,700 of its workforce via a Zoom call in mid-May. The ride-hailing unicorn announced its 2nd round of layoffs in 2 weeks, cutting 3,000 more jobs.
CEO Dara Khosrowshahi in a note to employees said, “Uber will be re-focussing on its core business, moving people and delivering food and groceries.”
He also said that Uber 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.
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 hospitality firm 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. Agarwal said, “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).”
The online travel giant 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. They also said, “Keeping this in mind, we have had to take this sad but inevitable decision of rightsizing our workforce in these businesses.”
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.
CEO Ashish Hemrajani, Founder-CEO, BookMyShow, in an email to employees said, “…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.”
Hemarajani said the teams that are staying back have voluntarily taken salary cuts ranging from 10% to 50% at the leadership level, given up their bonuses and salary raises. He also 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.
Cure.fit co-founders Mukesh Bansal and Ankit Nagori confirmed with YourStory that 300 trainers, mostly access staff, who were hired for future extension from smaller towns, were laid off.
Bansal said, “Close to 90% 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.”
Furthermore he 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.”
The Bengaluru-based home design and renovation startup Livspace has laid off 450 employees due to the adverse impact of the lockdown. 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, LivSpace said.
While saying it was an extreme decision, Livspace also said, “About 15% of the organisation have been impacted due to this decision, which was the last resort for us.” Livspace said the company will provide health cover to these 450 employees and their families for the next three months.
CarDekho has also laid off employees and cut the salaries as it looks to weather the COVID-19 crisis that has badly hit the Indian auto sector.
Girnarsoft Group, which runs the online auto classifieds portal , 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.