New Delhi, May 24 (SocialNews.XYZ) The Covid-19 blow appears to have forced even those startups and unicorns that have managed to raise new funding go for a leaner workforce, firing employees in thousands.
Foodtech unicorn Swiggy, for example, raised almost Rs 1,185 crore this year as part of its Series -I round.
And yet, the company had to announce its plans this month to let go of 1,100 employees, nearly 14 per cent of its workforce, spanning across grades and functions in the cities and head office as Covid-19 continues to hurt its business across verticals.
“The biggest impact here is on the Cloud kitchens business, with many unknowns about volumes through the year. Since the onset of Covid-19, we have already begun the process of shutting down our kitchen facilities temporarily or permanently, depending on their outlook and profitability profile,” Sriharsha Majety, Co-founder and CEO, Swiggy, said in a statement announcing the lay offs.
Similar is the story of Zomato, another unicorn, which is Swiggy’s major rival in the India market.
Zomato, which is also a favourite among investors, also got hit hard by the COVID-19 pandemic, leading it to announce the decision to lay off nearly 13 per cent of its workforce — over 600 employees.
“While we continue to build a more focused Zomato, we do not foresee having enough work for all our employees. We owe all our colleagues a challenging work environment, but we won’t be able to offer that to 13 per cent of our workforce going forward,” Zomato CEO Deepinder Goyal said in a statement this month.
Similarly, barely days after raising over Rs 319 crore in Series D round of funding, financial technology company Lendingkart Technologies announced it has laid off nearly 200 employees, or 30 per cent of its workforce.
LendingKart was identified as a “Soonicorn” by Inc42 in the digital lending space for possessing the potential to become a Unicorn company by 2020.
In a statement, the company said the outbreak of COVID-19 and the resultant slowdown has compelled it to take some measures to rationalise the employee base across offices to ensure long term sustainable business.
“This exercise is an extension of our annual appraisal cycle, wherein we do rationalise the team by about 15-20 per cent basis performance. This year, additional right sizing has been undertaken to account for the business volumes that we anticipate in this financial year,” the company said in a statement on Friday.
According to a survey by IT industry body Nasscom this month, 90 per cent tech startups in India are facing a decline in revenues due to the impact of COVID-19 pandemic.
About 30-40 per cent have already temporarily halted their operations or are in the process of closing down,.
Among business-to-customer startups, about 60 per cent are facing business closure, according to the report.
About 34 per cent of start-ups are suffering revenue decline of over 80 per cent, showed the findings of the “Start-up Pulse Survey”.
While 70 per cent of travel and transport startups reported suffering 40 per cent revenue decline, 14 per cent of edtech, fintech and healthtech startups expect growth in revenue amid the COVID-19 crisis.
The month-long survey further revealed that 70 per cent start-ups have runway less than three months, with those in the business-to-customer segment majorly affected.
With over 9,300 tech start-ups, India continues to be the third largest tech startup ecosystem in the world.