Layoffs despite startups being flush with funds leave workforce enraged

New Delhi: After funding galore that saw more than $42 billion flowing in the Indian startup ecosystem last year alone, the current layoff season has shaken up the country's workforce, especially the young, who quit traditional, stable companies to join startups at crazy packages.

The blockbuster startup party, that started in the pandemic years, appears to be over as thousands have been fired from startups ranging from edtech to e-commerce and healthtech verticals.

The professional networking platforms like LinkedIn are full with raging posts from employees who have been asked to leave. The situation is set to get worse with recession looming and funding drying up.

From early-stage startups to "soonicorns" (set to become unicorns with a valuation of $1 billion and above) and the unicorns — all are bracing for a harsh winter ahead.

In total, over 6,000 people have been shown the door in the name of "restructuring" and "cost cut" as startups and unicorns shut non-performing verticals, cut marketing spend, and freezing fresh hiring.

Edtech major BYJU's-run WhiteHat Jr forced more than 1,000 employees to resign after they were either asked to join at different locations or return to Mumbai or Gurugram.

Sources close to the company had told IANS that WhiteHat Jr asked its nearly 3,000 sales and support employees to report to either Mumbai or Gurugram (out of its 5,000-strong workforce that includes teachers which are on contractual basis, and hence not full-time employees) in April, leading to mass resignations.

Several sales executives have also quit BYJU's after they were asked by the HR team to join various locations on meagre salaries.

Edtech platform Unacademy first laid off nearly 600 employees, contractual workers and educators — about 10 per cent of its 6,000-strong workforce across the group — in April.

Unacademy's co-founder and CEO Gaurav Munjal has predicted a funding winter that can last as long as 18 months, saying it will cut costs wherever required to weather the dry spell and become profitable.

In a letter to employees, Munjal said that "we must learn to work under constraints and focus on profitability at all costs".

"Some people are predicting that this (funding winter) might last 24 months. We must adapt. This is a test for all of us. We must learn to work under constraints. We must focus on profitability at all costs. We must survive the winter," he wrote.

Another online learning company Vedantu has fired more than 424 workers owing to "financial constraints".

According to Vamsi Krishna, CEO and co-founder of Vedantu, the external environment is tough as the Russia-Ukraine war, impending recession fears, and Fed rate interest hikes have led to inflationary pressures with massive correction in stocks globally and in India.

"There is no easy way to say this but I am truly sorry. Out of 5,900 Vedans (employees), 424 of our fellow teammates i.e about 7 per cent of our company, will be parting with us," Krishna said last week.

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