Tech employees and young college students are the hardest hit as Indian startups continue to lay off in mass numbers.
Mass layoffs from Indian startup companies have hurt young tech graduates leaving them without a source of income just three or four months after their course.
Deopal Indra, a BTech graduate from NIT Kurukshetra, was laid off by a major Edtech firm just three months into his new job as a software developer. He was hired as part of the campus drive but was abruptly asked to leave. He used to work from his home in Patna and had not gone to his office. But with no job, he has been left without a source of income and has not even been able to inform his parents.
“I don’t even have one percent joy or excitement about this festive season. I could not even tell my parents about this. And my company left me at the point where neither will I be considered a fresher nor does four months count as experience,” he said.
Asif, one of Deopal’s classmates, also said he was laid off by the same firm three months into his job. He also used to work as a software developer and was given no contract before he was eventually sacked. “There was no reason for the sack. My manager said ‘you are a deserving candidate but I got this from the head of the department.’”
Deopal Indra said that his company came to his college as part of a placement drive and hired about seven people, six of who joined immediately. But among them, three—most of them software developers—have been asked to leave. In one of his friends’ team, there were 42 software developers, out of which, 20 were fired.
Junior software developers were not the only ones to be laid off. Rajat, a senior software developer was also asked to leave by another Edtech firm. He says he was laid off with one month’s notice period and his credentials from Slack and other platforms were taken off. He adds that most of the people who were fired belong to the tech department, and the final number of people who departed could be higher than the numbers mentioned by the companies. Rajat had been working for the company for a year.
Aman, a tech expert and a coder, said software developers are often the main casualty because companies prefer employees to have multiple specializations in the tech field. “People with limited skillsets in the tech field can find it difficult to survive in the market. For example, a software developer who only knows coding cannot survive for long, if he or she does not know other specialized skillsets such as artificial intelligence, cloud computing or machine learning. It is also worth mentioning that for Edtech firms, content creation is more important than technological efficiency.”
Layoffs have become commonplace among Indian startups this year. Unicorn startups such as Ola, Blinkit, Unacademy, Lido Learning, Vedantu and Cars 24 have all laid off a total of over 7,000 people by June this year. It was followed by BYJU’s, the biggest Edtech firm, announcing plans to lay off 2,500 people earlier this October.
Balbinder Singh, a marketing expert, says a major reason behind the mass layoffs, majorly by Edtech platforms and other startups is the global economic slowdown. These startup companies are backed by foreign investment firms that have urged them to cut down on expenses.
“Venture firms like Sequoia Capital, Softbank, and Venture Partners, which have been bankrolling Indian startups, have urged the companies they have invested in, to lower their expenses. This is because of the ongoing pandemic and rising interest rates that have slowed down the growth of every major tech sector,” he said.
Sequoia Capital, which invests in the Edtech firm BYJU’s had reportedly asked its ecosystem to tighten the spending in May while Softbank, another major investor, urged its funded startups to prepare for a ‘funding winter’.
Edtech firms are also facing the prospect of their customer base shifting back to offline studies due to lack of personal interaction. This has led to companies moving back to a stringent profit-making model, which in turn, has led to layoffs.
“As a mature organization that takes its responsibility towards investors and stakeholders seriously, we aim to ensure sustainable growth alongside strong revenue growth. These measures will help us achieve profitability in the defined time frame of March 2023,” said Mrinal Mohit, chief executive of BYJU’s India business, shortly after announcing plans to lay off 2,500 people.