The Cost of Over-Hiring: Meesho Lays Off 251 Employees

However, Meesho’s recent announcement of laying off 251 employees, or nearly 15% of its workforce, has raised concerns about its ability to sustain its growth and profitability. The company cited “judgment errors in over-hiring ahead of the curve” as the primary reason for the layoffs, which will affect various functions such as customer support, operations, and product management. Meesho said that it would provide a severance package, counseling services, and job referrals to the affected employees, who would have an option to rejoin the company if they meet the requirements in the future.
Meesho’s layoffs come at a time when the Indian e-commerce market is undergoing significant changes due to the COVID-19 pandemic and the rise of new competitors, such as Amazon and Reliance. The pandemic has accelerated the shift towards online shopping and reduced the dependence on traditional stores and markets. As a result, Meesho has seen a surge in demand for its platform, especially from small businesses and women entrepreneurs who use it to reach customers and increase their income. However, this growth also put pressure on Meesho’s operational efficiency and cost structure, especially as it expanded into new product categories and geographies.
Meesho’s layoffs reflect a broader trend in the Indian startup ecosystem, where many companies are struggling to balance growth and profitability amid intense competition and changing market conditions. Several startups, such as Ola, Zomato, and Swiggy, have also laid off employees in the last year, citing similar reasons of optimization and consolidation. Although such layoffs are painful for the affected employees and their families, they may also signal a positive sign of maturation and discipline in the startup ecosystem, where companies are expected to focus on sustainable growth, customer satisfaction, and innovation.
Meesho’s stakeholders have expressed mixed reactions to the layoffs, with some calling it a necessary step towards efficiency and others criticizing it as a betrayal of trust and values. Meesho’s co-founders, Aatrey and Barnwal, have issued a joint statement acknowledging the impact of the layoffs on the affected employees and their families, but also emphasizing the importance of the move for the long-term success of the company. They said, “We are deeply grateful to our employees for their contributions to Meesho’s journey so far, and we remain committed to our mission of empowering millions of entrepreneurs in India. We believe that by optimizing our resources and investing in our core strengths, we can create more value for our customers and shareholders.”