In what may come as another blow to the already shaken faith in the start-up ecosystem, B2B trading platform Udaan has laid off 160-180 of its employees. While the company didn’t confirm the exact number of people shown the door, sources close to the company put the number at 160-180. The company has about 4,500 employees on roles.
“We believe in efficiency as a driver of profitable growth and have already made significant progress towards building a sustainable business. As the market evolves, we continue to tweak our already proven business model to make it stronger, more efficient, customer centric and agile. In this direction, we have taken various steps to enhance efficiency, refine our cost structure and grow faster in our journey to achieve strong unit economics. However, the efficiency enhancement exercise has also resulted in certain redundancies in the system, with some roles no longer required. On the other hand, as part of the long-term plans of the organisation, we continue to hire talent for the new roles that have been created to grow the business faster,” an Udaan spokesperson said via email. The company has pledged to extend all the required support to the impacted employees including medical insurance for self and family (based on the existing coverage plan), compensation package as per company policy and providing placements assistance.
However, the need for layoffs in Udaan – which raised $200 million in debt convertible into equity this January and which is also eyeing an IPO in 2023 --
seems a bit off, particularly because B2B ecommerce isn’t a sector that is much impacted by the current funding winter.
So far, close to 10,000 employees from several start-ups including unicorns such as Unacademy, Vedantu, MPL, Cars24, Ola, and Meesho have been given the pink slip. Smaller startups such as Rupeek, FarEye, Furlenco, Trell and OkCredit also have made their workforce leaner. However, its edtech that has seen the maximum number of layoffs with close to 4,000 people being retrenched from the sector.
A wave of layoffs is sweeping the US as well. Start-ups such as Compass, Redfin, Coinbase, Tesla, Gopuff and Reef have asked scores of people to leave. Salaries, which till 2021 were setting new records with startups shelling out lakhs to hire the best coders and developers, are going back to pre-Covid levels. The hiring boom and high salaries were a result of the funding frenzy and hinted at future promises made by companies rather than their actual performance. The reality struck sooner than later.
Startups are known for hire and fire culture, but people often ignore the ‘fire’ part of the deal until it happens to them. Even if things change for good in the coming months, it would be difficult for these startups to attract good talent to scale their business. But some believe that the layoffs also are a result of over-staffing.
Whatever may be the reason, losing jobs can never be a good news for anyone.