Indian startups’ layoff saga continues as edtech firm Vedantu handed out pink slips to its employees. On Wednesday, the Tiger Global-backed edtech unicorn laid off up to 385 employees, or 11.6% of its workforce, in its human resources, learning and content segments. The company has laid off more than 1,000 employees so far this year. In May, the company laid off up to 620 employees, followed by 100 employees in August amid the funding crisis. The company’s total workforce also fell sharply from 5,500 employees in May to 3,300 in December.
The company is reportedly offering both severance and placement options to the laid-off employees. In order to preserve its finances and achieve profitability, the company is also resorting to spending cuts, including cutting CXOs’ salaries by 50%.
Landscape of domestic layoffs
Meanwhile, the layoffs aren’t limited to the country’s edtech space. As the domestic start-up segment collectively witnesses a funding crisis, start-ups in other segments such as food aggregator Swiggy are also planning to employ 250 people, or 3% to 5% of its workforce, in the next few months. According to reports, the layoffs at Swiggy will span supply chain, operations, customer service and technology as the company struggles to trim its $315 million loss between January and June this year. The company’s losses are much heavier compared to its competitor Zomato, which suffered a $50 million loss over the same period.
Earlier this week, health and fitness platform HealthifyMe announced that the company would be giving pink slips to 142 employees, or 7% of its workforce in the operational and core team segments. The company has more than 2,000 employees. The company is offering the affected employees two months’ severance pay.
Notably, the layoffs have also crept up on the country’s hospitality start-ups, with IPO OYO Hotels and Homes announcing it will lay off 3,700 employees, or 10% of its product and engineering workforce, to reach profitability. Many employees in the teams of companies and holiday homes are also affected. The layoffs at OYO are seen as a cleanup to find a path toward profitability and smooth operations with its partners ahead of the launch of its IPO next year. Ritesh Agrawal, the chief executive officer of OYO Hotels, has urged companies hiring in the technology space to reach out to the company so it can offer employment opportunities to affected employees. Notably, the Softbank-backed company had reported a net loss of ₹333 crore in the July-September quarter of this year.
Last month, Amazon announced that it would be shutting down its online learning platform, Amazon Academy, effective August 2023. The company said the decision to cease operations was made after evaluating the company. Domestic edtech startups have borne the biggest brunt of the winter’s funding, with the country’s top edtech players Unacademy and Byju’s announcing they will be handing out pink slips to more than 1,000 and 2,500 employees, respectively. The funding winter is expected to be extended to the next 12 to 14 months.
Funding crisis for startups
Funding for the startups fell 35% to $24.7 billion between January and November this year, according to a report by Traxcn. In addition, due to a lull in late-stage funding, the total number of funding rounds also decreased significantly by about 30%; The number of investment rounds fell to 1,841 so far this year from 2,647 rounds in the period from January to November last year. Late-stage funding, which is investor capital attracted to established startups, fell 45% year over year to $16.1 billion during the period.
Landscape of global layoffs
Meanwhile, amid the deteriorating macroeconomic situation, the global tech landscape is not isolated from layoffs. Morgan Stanley is reportedly the latest multinational to have laid off 1,600 employees, or 2% of its workforce, worldwide. The company employs up to 81,567 people worldwide. Additionally, food and beverage company PepsiCo is reportedly planning to hand out pink slips to hundreds of employees at its North American headquarters to help organize for efficient operations. The company employs more than three lakhs worldwide, of which over 1.2 lakhs are based in the United States.
Amid the turbulent macroeconomic trends and rising interest rates, several big tech companies have announced massive layoffs and hiring freezes. Last month, social media platform Meta announced that the company was laying off 11,000 employees, or 13% of its workforce. Elon Musk’s Twitter has already laid off 50% of its workforce. Amazon will lay off 10,000 employees. In October, software giant Microsoft laid off up to 1,000 employees, or 1% of its workforce, in its third round of downsizing. Snap, the parent company of social media platform Snapchat, laid off 20% of its workforce to restructure its business.
