The adverse impact of the Coronavirus crisis on the Indian economy can be seen clearly. This unthinkable virus is engulfing the world in such a way that no one expected. This has not even spared the Indian Startup ecosystem which is the 3rd largest in the world.
Several surveys have been conducted on startups.
The following results are found
- 70 percent of startups have less than three months of cash runway.
This is the detail of Nasscom survey.
- Around 40 percent of startups have either temporarily shut down operations or are on the verge of shutting down.
This is the result of the industry body’s month-long e-survey, which was conducted to study the impact of the COVID-19 pandemic on Indian startups.
There are many challenges that startups face across sectors i.e. from food tech to hospitality and travel in order to sustain their business in terms of cash liquidity, getting funds from investors, etc.
This has led to, on one hand, job losses, temporary leave, or furlough of many employees, and on the other hand, founders and CEOs are cutting their salaries to make up the revenue downturns.
Here is the list of top 10 startups that have lopped off manpower to sustain the impact of COVID-19 crisis
Last month, ride-hailing unicorn Ola has informed that it would lay off around 1,400 employees due to crumbling situation. Although, salary cut was observed among its senior management to avoid such a situation.
But informed it would be the last time any COVID-19-related job cuts would be made. The company did not mention the department or positions that would be affected.
Co-founder and CEO of Ola, Bhavish Aggarwal, has sent an email to employees in which it was written: “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.”
Therefore, the revenue of Ola has plunged to nearly 95% over the last two months. The company was permitted to restart its services in 160s cities in mid-May and looking for ways to conserve cash aggressively for the future.
In May, food tech lead Swiggy has made an announcement that the company would be knocked down and reduced costs.
Co-founder and CEO of Swiggy, Sriharsha Majety, has sent an email to employees which stated, “Today is one of the saddest days for Swiggy as we must 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.”
In solace, the mail has also mentioned that all affected employees would get at least three months of salary, irrespective of their notice period or tenure.
Swiggy is also focussing on a healthcare plan. It will offer medical insurance cover for employees who have lost jobs and their families till December 31, 2020, and also offer insurance cover for their parents till December 31, 2020. Not only this, Swiggy is concerned, so it is focussing to ensure a smooth career transition and offering necessary career support for the next three months for the affected employees.
Curefit, too, has fired 300 trainers, mostly access staff, who were assigned for a future extension from smaller towns.
Co-founders of Curefit, Mukesh Bansal, and Ankit Nagori had confirmed, “Close to 90 percent 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.”
Mukesh further informed, “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 and a separate emergency fund, which they can tap into.”
Uber has made two rounds of layoffs in two weeks. In the first round, it has laid off 3,700 headcounts via Zoom call in mid-May, and in the second round, it has laid off 3,000 headcounts. In a note to employees, CEO of Uber, Dara Khosrowshah, informed, “Uber will be re-focussing on its core business, moving people and delivering food and groceries.”
In fact, Uber will close or consolidate 45 offices globally and there will be an impact of layoffs on almost all departments. Moreover, the company is planning to close its incubator and AI labs and pursue strategic alternatives for its job recruiting app, Uber Works.
Zomato, a Gurgaon-based food delivery giant, has made an announcement of reducing 13% of its workforce along with salary cuts as the COVID-19 crisis has a worse impact on its business.
Founder and CEO Deepinder Goyal of Zomato, has sent a note to employees, that stated, “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 focused Zomato, we do not foresee having enough work for all our employees.”
Due to lockdown, several restaurants are closing permanently which is ultimately affecting the business of food delivery. It is expected that there would be a further 25% – 40% shrinkage in the next 6 to 12 months.
Moreover, the company will continue to provide support in terms of financial, outplacement support, healthcare, and equity to its affected employees. Besides, the company will continue to provide a 50% salary for the next 6 months.
OYO has put some of its employees on furlough globally. Founder and Group CEO of OYO, Ritesh Agarwal, has sent a letter and said in the video message, “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.”
Ritesh in a press statement 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.”
To all the affected employees, the company is allotting employee stock ownership plans (ESOPs) worth around Rs 130 crore as part of its efforts to minimize the disruption being experienced by them.
Ritesh expressed, “I would like to recognize 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).”
Livespace, Bengaluru-based home design, and renovation startup have laid off 450 employees due to the coronavirus crisis. Due to this decision, around 15% of the organization has been affected but this was the last resort for them.
Founders of Livespace to forgo their salary in the month of April, team leaders handed over their annual bonuses, and the company has introduced success-based variable pay across the broad. Moreover, the company will offer health coverage to the affected employees and their families for the next three months.
Lockdown has impacted brutally on travel firms. MakeMyTrip has also laid off 350 employees. Executive Chairman and founder Deep Kalra and Group CEO Rajesh Magow of MakeMyTrip Group sent an email to employees which stated, “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. 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 also put 270 employees on furlough as the expected revenue in the coming month will be intensively reduced due to the pandemic.
Ashish Hemrajani, Founder-CEO of BookMyShow, has sent an email to affected employees stating, “…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.”
Further, teams that are staying back will be facing a salary cut from 10% to 50% depends upon the leadership level and have to give their bonuses and salary raise. Moreover, the company is trying to provide financial support continued health insurance cover and outplacement support for affected employees.
Cardekho, an online auto classified website, has also laid-off employees and slashed salaries due to the bumpy ride of the Indian automobile sector and disruption caused by the pandemic.
Girnarsoft Group, the parent company of Car Dekho, 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.”
It is expected that the number of laid-off employees is as high as 200.