Indian start-up, backed by Twitter and Google, fires 20% workforce
A month after it fired over 100 employees, Indian social media app ShareChat has now laid off 20% of its workforce. The Google and Twitter-backed company is one of the many heavy-funded start-ups that have resorted to job cuts in order to reduce costs. The start-up informed employees about its decision to eliminate roles via email.
Why does this story matter?
- An uncertain stock market, macroeconomic headwinds, and an impending recession have made investors wary of high costs. As a result, they are pushing tech companies to cut costs.
- Tech companies from the very top to the bottom are going through something they have never faced before. As long as portent economic omens don't change for the good, there will be more job cuts.
The company axed over 400 employees
Mohalla Tech, the parent of ShareChat and Moj, has laid off over 400 staffers. The firm is yet to disclose details about affected departments. Per MoneyControl, fired employees include those in senior management and mid-to-junior management. Apart from informing affected employees via email, the company also announced the decision on Slack to unaffected staffers.
Overestimated market growth and underestimated liquidity squeeze: CEO
Ankush Sachdeva, the CEO of ShareChat, said in an internal note accessed by the Economic Times that employees have been laid off to "ensure the financial health and longevity" of the company. He added that the start-up "overestimated the market growth in the highs of 2021 and underestimated the duration and intensity of the global liquidity squeeze."
The firm shut down its gaming platform Jeet11 last year
In December last year, the company shut down its fantasy gaming platform Jeet11 and laid off 5% of its employees. Speaking about the new round of layoffs, a company spokesperson said, "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."
Employees will get their total salary for the notice period
The laid-off employees will receive their total salary for the notice period and 100% of variable pay till December 2022. They will also get two weeks' pay for every year in the company. Health insurance coverage will remain intact till June 2023 and ESOPs will also continue to vest till April 2023. Employees will be allowed to retain their work assets as well.