Does India seem to be recovering from the layoffs in startups?
A layoff is an unjustified, involuntary termination from employment. It is started by the employer for commercial or financial considerations.
The economic fallout from the Covid-19 epidemic was significant, with more than half of 2020 being marked by harsh lockdown restrictions in India.
Therefore, it was regrettably not surprising when businesses—startups as well as big corporations—fired employees in an effort to save their operations from failing. 12,951 startup employees in India lost their employment as a result of the bleak economic climate of that year.
Layoff Statistics
According to data, more than 43,000 employees from 342 startups and IT organizations have been let go since April 1, 2022, with 13% of them coming from India. Additionally, employees of major IT firms like Microsoft and Meta have not been protected from losing their jobs.
More than 25,000 people have lost their employment in India since the epidemic began, and this year alone, more than 11,500 staff have been let off. Ed-tech companies like Unacademy, which has fired 1,150 workers, BYJU’S, which has fired 550 workers, and Vedantu, which has fired 624 workers, have dominated this awful situation. In fact, Uday and Lido Learning, two ed-tech businesses, have entirely shut down.
In addition to other industries, the healthcare company MFine, the ride-hailing platform Ola, the pre-owned vehicle marketplace Cars24, and the ride-hailing platform MFine all announced layoffs of 600 or more workers each. Meesho, MPL, Innovaccer, LEAD, Trell, and Blinkit are further Indian businesses and unicorns that have made staff reductions (now owned by Zomato).
Motivations Behind Startup Layoffs
For the public and private sector equities markets, 2022 has not been a smooth year. Due to the pressure from the worldwide sell-off, stock markets experienced unfavourable reactions and fell. Due to the struggles of listed companies, this had an effect on the new-age tech stock. After then, private market prices also began to decline. In terms of the number of unicorn firms formed, India has the third-largest startup environment in the world. Startups saw their values skyrocket in 2021, but they gradually began to decline and suffer a liquidity constraint this year as investors became weary of greater startup valuations.
Due to a financial shortage, Indian entrepreneurs were only able to raise USD 6.83 billion by the second quarter of 2022. From the USD 11.83 billion raised in the first quarter of 2022, this was down 42%.
The entire startup financing value in India was just USD 1.16 billion by July 2022, and it further declined to USD 1.1 billion in August 2022, marking the country’s lowest startup funding value in more than 17 months. Investors started acting as consultants for startups, teaching them how to survive. There were several factors at play when startups abruptly fired their staff members.
- Cost cutting
Startups found it challenging to maintain current business operations, let alone expand, as capital resources ran out. The lethargic market, which was having an influence on sales numbers and the company’s profitability, made matters worse.
- Staff Redundancy
Companies changed, frequently integrating internal activities or even cutting back on corporate operations. As a result, roles were eliminated, which resulted in personnel reductions.
- Relocation
Many businesses have relocated their operations or even closed down some of their premises. This resulted in significant staff layoffs, which had an impact on the local economy.
- Buyouts and mergers
Numerous companies with promising product portfolios were acquired outright or merged with larger businesses. As a result of the new management’s own plans and objectives, there were also layoffs of employees.
What Lies Ahead, Future?
Despite how dire the financing and layoff situation has been over the past seven to eight months, aggregate numbers are finally starting to increase. Indian corporations have experienced a 7% rise in their desire to employ, according to TeamLease, the largest human resource company in India. According to their Employment Outlook Report for the period of July to September 2022, this number may rise as high as 70% in the next few months.
The government’s numerous programs, which aim to restore the private sector to its pre-pandemic levels, are what is causing this increasing trend. Following the epidemic, automation dominates the market. Therefore, it makes sense that employees pick up the most recent information and technology related to their business. “Businesses are searching for multi-skilled, highly adaptable, technologically literate individuals who can fit into any function. Employees will need to learn not just complementary but also antagonistic abilities; for example, combining technology with creativity or technology with psychology is becoming more and more prevalent.
Conclusion
Many businesses choose the easy route of layoffs during economic downturns, blaming cost-cutting, staff reduction, mergers, buyouts, etc. Individual lives are disrupted by this action. These periods, though, are cyclical in nature and outside of our control. The job situation will improve as the Indian economy expands and the overall situation improves.
FAQs
What is a layoff?
A layoff, to put it simply, is the termination of employment for factors other than performance. Employers typically start it for financial or commercial reasons.
What triggers layoffs in startups?
Some of the main causes of layoffs in startups include the following:
- Cost cutting
- Redundancy of Staff Relocation
- Buyouts and mergers
How many staff have Indian startups laid off?
In India, more than 25,000 workers have lost their employment since the epidemic began, and this year alone, more than 11,500 workers have been let go (2022).
