News: Pay cuts, layoffs: Startup morale under lockdown-25-04-2020
Updated On :25-04-2020
Over the past 4 weeks, at least two dozen top companies have fired employees and contract staff.
BENGALURU: Despondency is taking hold of employees at startups in India that are shrinking operations amid the lockdown to contain the Covid-19 outbreak, putting jobs on the line.
Some dismissals are apparently occurring despite promises to the contrary. Avinash Kumar Mehta had been told by social commerce company Meesho’s CEO at an allhands meeting recently that staff need not worry about their jobs. The assurance was shortlived, he said.
“Suddenly, yesterday employees started getting calls and management forced us to submit our resignation on the same call. I just have one question to Meesho CEO: You don’t value your words, how will employees trust you,” Mehta said in a post on LinkedIn.
Earlier this month, Meesho had fired close to 150 executives across roles citing “cost-cutting” measures that took everyone in the firm by surprise, according to employees that ET spoke to.
WhatsApp messages and team communications that ET has reviewed indicated that the firm asked employees to send their resignation emails within minutes of breaking the news to them. “We were just shocked because the company promised it had enough money to run for 20 months,” said another mid-level executive, requesting anonymity. Meesho didn’t respond to ET’s queries.
Over the past four weeks, at least two dozen top companies have fired employees and contract staff. They include Oyo, BlackBuck, BharatPe, Acko, Fab Hotels, Zolo Stays, Treebo, Udaan and Homelane. Others such as Bounce, Livspace, AgroStar, BookMyShow and Droom have cut salaries, according to data shared by Big.Jobs. The salary cuts range from 15% to as much as 50-70%. Some like 91Springboard and Grofers have put a few of their employees on the bench.
The government has been consistently urging companies to refrain from layoffs and pay cuts as they cope with the economic distress. ET spoke to seven startup employees. Some have retained their jobs, some have taken pay cuts and others have been fired.
Fear Heightened by Limited Social Contact
A common thread at all firms is a high level of anxiety, fear of the unknown and pressure to outperform in a suboptimal market.
“It's like running on a very steady pace and suddenly someone kicks you,” said a midlevel employee at a ride-hailing company who continues to work there but is sceptical about his long-term prospects. The fear has been heightened by limited social contact due to the isolation of working from home, they say.
Take the instance of a senior executive at BharatPe who recently lost his job. “It’s not just about the money,” the 37-year-old executive said. “These incidents shake your confidence, your career planning and force you to make sub-optimal decisions for yourself,” he told ET, wanting to keep his identity confidential.
Those who’ve held on to their jobs also highlighted the fear that market conditions changing for the worse will hurt their career prospects, if not immediately, then in the coming months.
“I took a pay cut for the next three months (non-optional), but does that guarantee my job is safe? No,” said a top-level executive at a late-stage consumer internet firm. “The next two quarters are going to be a washout too, and no one can predict when it gets better. This also affects the morale of the team under me. There is no security.”
More jobs at risk
On Thursday, ET reported that technology startups are likely to cut hundreds more jobs in the next six-eight months with retail, hospitality, travel, mobility and financial services being the worst affected sectors.
Founders indicated that their imperative is largely to hold on to cash for the next 20 months at least and that will mean making harsh decisions. A large number of these entrepreneurs are also young CEOs who may not have seen the dot-com crash or any equivalent scenario that they can draw parallels with.
To be sure, the drive to cut wage bills has been on for the past six months with startups only selectively replacing those who have quit, promoting internally, freezing new hiring plans and downsizing headcount.
Last year, Ola cut its people count by 8% and Paytm by 7%. Zomato laid off more than 500 executives, about 10% of its overall strength, while Rivigo sacked 70-100 employees and Quikr handed pink slips to over 1,000.
