In this article, we will look into the IT Layoffs in 2022 by various tech companies. Also what may be the possible reasons for these layoffs.
|Organization||No. of Employees Fired||Month||Reason||Industry Type|
|FrontRow||145||May||Cost-Cutting||Learning and community|
|Trell||~300||March||Cost-Cutting||Lifestyle / Entertainment|
|OkCredit||~40||February||Business Model Change||Fintech|
Analysis of the Layoffs – 2022
SoftBank-backed Cars24 is laying off 600 people.
The layoff looks to be a move to save money and extend the runway as it becomes more difficult to raise new capital, and investors have been pressuring portfolio businesses to cut costs.
While the used car industry in India is developing, Cars24, like competitors Spinny and CarDekho, has yet to achieve profitability, owing to consumers’ reluctance to acquire new vehicles in the face of economic difficulties and carmakers’ production issues due to the global chip shortage.
Vedantu, an ed-tech business, has laid off additional staff as part of its second wave of layoffs this month. The Bengaluru-based ed-tech unicorn laid off 200 people on May 5, including 120 contractors and 80 full-time employees.
According to Vedantu, terminated employees would receive extended health coverage for themselves and their families until August 5, 2022, as well as access to 15 doctor consultations and discounted pathology and pharmacy services through Practo until April 29, 2023.
“The external environment is currently hostile. Inflationary pressures have resulted from the European war, fears of oncoming recession, and Fed rate hikes, resulting in significant stock market corrections globally and in India. In this scenario, capital will be scarce in the coming quarters,” said a Vedantu spokesperson.
Over 800 full-time employees at coding startup WhiteHat Jr have left in the last 60 days after the company, which was acquired by ed-tech behemoth BYJU’S, urged all of its employees to work from home within a month.
Full-time employees throughout the company, including sales, coding, and math teams, voluntarily resigned from the startup, according to sources, since they did not want to relocate to their various office locations.
“The business was definitely losing money.” “This was a cost-cutting exercise to lower expenses without jeopardizing the company’s reputation,” one of the quit employees explained.
According to three people familiar with the situation, Meesho has laid off roughly 150 people, mostly from its supermarket section Superstore (Farmiso). This comes as the business, which is backed by SoftBank and Facebook, works to combine its grocery app Superstore with its main app.
This would be the second time Meesho has opted to terminate a substantial number of staff. During the initial wave of the coronavirus epidemic two years ago, it laid off more than 200 of its roughly 700-strong workforce.
“Meesho has been looking to fund up to $1 billion for over a month, but the company is having trouble convincing existing and new investors,” a source said.
After Byju’s, Unacademy is India’s second-largest ed-tech company. Initially offering classes to help students pass government service exams, it has since expanded to include most exams sought after by Indian students, including American medical admission exams, like its competitors.
In recent years, the company has grown significantly, but so have its liabilities. According to research, its sales and losses have increased by 6X by 2021. Its expenses are primarily made up of payments to employees and educators, as well as marketing expenditures. Users’ subscription payments provide for the great majority of its revenue.
According to an Unacademy statement, the number of employees was less than 600 and represented less than a tenth of the total workforce. According to the statement, “the vast majority of roles impacted” were “as a result of” a series of “assessments,” with affected employees receiving “generous” severance pay.
Furlenco, a furniture startup based in Bengaluru, has laid off roughly 180 staff in order to save money. These layoffs, according to many employees, are in keeping with the startup’s ambitions to achieve profitability before a public offering.
According to Ajith Karimpana, the founder and CEO of House of Kieraya, which owns three brands: Furlenco, Furbicle, and ULMTD, the company had to let go of some employees. Around 95% of those laid off worked in consumer-facing positions, such as customer service and other comparable positions.
The company claims to have extended medical coverage to those affected. Karimpana also mentioned that the company has transitioned from phone-based orders to app-based orders, which necessitated the downsizing of some departments.
Trell, a social commerce business managed by influencers, is on the verge of laying off 40-50 percent of its workers, according to three people familiar with the situation.
On the condition of anonymity, one of the insiders stated, “Trell is expected to lay off close to 300 people with immediate effect.” “The company employs a total of 700 people, 500 of them are full-time.”
The news comes as the corporation is reportedly under scrutiny by an EY India forensic team. According to an ET article, the firm is investigating possible related party transactions and other financial irregularities by the company’s founders.
“Trell had a term sheet for a $100 million round in December, which would have given it a valuation of $700 million.” “However, the round did not happen,” claimed another source. The individual also requested anonymity because the discussions were private.
According to insiders, the layoff was caused by the failure of investment talks.
According to three persons familiar with the situation, digital accounting firm OkCredit has cut off roughly 40-45 staff as it shifts its focus from bookkeeping to fintech activities. This is the first time the Lightspeed-backed company has laid off employees.
“The company has fired 35-40 employees in the last two weeks,” stated one of the sources listed above, who asked to remain anonymous. “Affected employees have received customary severance compensation as well as other perks such as insurance and outplacement services.”
OkCredit has laid off anywhere from 30 to 35 percent of its whole personnel, according to sources. “The company used to have about 140 employees, but today it only has roughly 80.” The majority of those affected work in the growth and payments areas” said another source who asked to remain anonymous.
This trend occurs at a time when most Indian companies are raising significant amounts of capital and there is a hiring boom.
OkCredit offers separate apps for bookkeeping and e-commerce enablement for small and medium-sized businesses. The company has raised around $90 million and competes mostly with B Capital-backed Khatabook, Vypaar, and a few other startups. It raised a $67 million Series B investment in September 2019, but no subsequent rounds have been raised thereafter.
Lido Learning, a Mumbai-based ed-tech business, is suffering financial restrictions to maintain its day-to-day operations at a time when the Indian ed-tech market is loaded with capital.
According to numerous employees, Lido Learning’s founder, Sahil Sheth, notified the team in a virtual town hall earlier this month that the company is experiencing financial issues and will be unable to pay employees’ salaries for the month of January and the first week of February. According to a few employees, the corporation has laid off between 150 and 200 people.
While the corporation has stated that pending salaries will be paid within “30 to 90 days,” employees believe this is improbable given the company’s present financial situation. A