Startups, and that too unicorns could be where the next set of pink slips comes from after the fashion and auto sector.
Since Oyo fired 2,500 employees last week as part of a major layoff, 245 jobs will be affected by Zomato’s purchase of UberEats, Uber said.
“What is happening today is that they are told that their jobs will be impacted, but they can apply for positions within Uber. They will stay on Uber’s rolls until March 3. They will be offered outplacement support and services in the event they want to look for opportunities externally. If the organization is unable to locate them by March, they will be liable for severance, “Uber sources told Business Insider.
Unicorn companies such as Oyo and PayTm provide their workers with pink slips to reduce expenses and keep up with the ecosystem. Ride-hailing giant Ola also laid off about 500 employees or 20 percent of their workforce to cut costs as they set about launching a public offering in the coming years. On the other hand, Paytm, the digital payment giant, reportedly also laid off nearly 500 workers, late last year.
This is, according to experts, the beginning of an era in which startups entered a phase of maturity. It means that they may have left behind their extremely high-growth state to pursue stability. Most have been reeling under losses, even the most common ones.
“With increasing competition, companies find it hard to hold down on costs, laying off workers is one of the ways they choose to remain in the business. Startups want those decisions to offer the best products and services at the most competitive price. Consolidation and mergers would result in some layoffs so we might not see hyper-growth per se, “Ajay Shah, VP of Teamlease Services Recruitment told Business Insider.
Start-up layoffs are not an aberration or a one-time event but are part of the basic corporate strategy as they move towards profitability. It is also a depletion offset within an organization because of a slump in growth.
Uber, who forayed into the business of food delivery in 2017, was betting on heavy discounts to attract and retain customers. But it just didn’t make a mark. Eventually, its operating losses amounted to as much as 2,197 crores, at 1,645 crores, which was much higher than its traditional ride-hailing company. That is what led to a sell-out. The website had more than 10 million users–compared with 40 million Zomato users and 42 million Swiggy users.
On the other hand, Oyo focused on bringing about rapid growth and profitability. But a mounting loss of 2,384.7 crores in 2019 was reported. Added to that, it had many complications that led to terminations, such as contractual and legal troubles.