In the latest instance of employees finding themselves out of a job due to cost-cutting, Google-backed ShareChat’s parent company Mohalla Tech has fired 20% of its workforce, as per an internal company note circulated by CEO Ankush Sachdeva.
While the company refrained from officially confirming the exact number of laid-off employees, it is estimated that around 500 employees have been impacted by the ShareChat parent’s latest measure to cut down on expenses, and this comes as the result of the lack of availability of fresh capital. The impacted employees span across the company’s junior, middle, and senior teams.
A spokesperson said that they had to take “some of the most difficult and painful decisions in our history as a company and had to let go of around 20% of our incredibly talented employees who have been with us in this start-up journey.”
“The decision to reduce employee costs was taken after much deliberation and in light of the growing market consensus that investment sentiments will remain very cautious throughout this year,” the spokesperson added. This marks the second wave of layoffs by the company – Mohalla Tech ended the previous year by laying off over 100 employees. The round of layoffs had come after it shut down Jeet11, its fantasy sports platform.
“There is a growing market consensus that the current global economic downturn would be a much more sustained one, and we thus have to, unfortunately, seek more cost savings by reducing our team size,” read the internal memo, which was seen by Reuters. The recent round of layoffs also comes months after the homegrown startup raised around $255 million in funding and was last valued at $5 billion.
The company will not let the impacted employees leave empty-handed – it has offered severance packages that include two weeks’ pay as ex gratia for every year served with the company, retaining of work assets such as laptops and smartphones provided by the company, as well as health and insurance policy for the impacted employees (which will be active until June 30, 2023.) Additionally, employee stock ownership plans will continue to vest as per schedule until April 30, and unused leave balances of up to 45 days will be encashed as per the current gross salary. The impacted employees will also get 100% of their variable pay until December 2022, and a payout for the notice period.
Going forward, ShareChat aims to be cautious about its investment sentiments, while doubling down on its work toward advertising and live-streaming revenues as a means to tackle the economic downturn. It believes that firms need to direct investments solely toward the highest-impact projects as capital became expensive amongst uncertain economic conditions.
ShareChat’s decision to reduce its workforce adds to a story that has been common over the past months. 2022 saw more than 20,000 employees across startups get fired from their jobs across mass layoffs and a funding winter, and reports suggest that things are going to be worse in 2023 (especially the first half). According to Venture Intelligence, the total amount of funds raised by Indian startups last year amounted to $24 billion last year, a steep fall from the $42 billion that they raised in 2021. The funding crunch can also be contributed to a more cautious approach by investors, who have tightened their purse strings, opted to take fewer risks in a turbulent stock market, and refused to cut cheques for companies