Layoffs in the Start-Up World 2020-2021

Uncertain future has led the start-ups to trim its workforce.


World’s largest human health crisis stalled the commercial activities that resulted in layoffs by the Indian start-ups. It was unexpected how single-handedly a deadly virus could wreak havoc in the revenues of start-ups belonging to verticals of food, hospitality, gyms and dance classes, cinema halls, and mainly sectors that are human-intensive. According to the Centre for Monitoring Indian Economy (CMIE) data, the unemployment rate was recorded at 6.9 percent in February 2021. The start-ups staring at a complete shutdown of operations were left with no other choice but to trim their workforce. Here are some of the Indian start-ups that went on with the layoffs.

Pandemic, A Nightmare for Indian Start-ups

As cinema halls, concerts and stand-up comedy shows gathered dust for almost a year, it has strained BookMyShow’s revenues that led to a layoff of its 200 employees in 2021 thus contracting its workforce by more than 35 percent. It is the second layoff since May 2020 where it trimmed 18 percent of its workforce amounting to 270 employees. It is a severe blow since BookMyShow earns a major chunk of its revenue ie.65 percent from movie ticketing. To sustain the business, it has launched BookMyShow Stream- a pay-per-view movie streaming service that is yet in its infancy.

Bounce – a two-wheeler rental service suffered the same fate as BookMyShow that recently laid off 200 employees in 2021 after laying off 130 employees out of 600 of its workforces in June 2020. The demand for shared mobility in the pre-covid levels was about 1.30 lakh rides a day which was reduced to a mere 35 percent despite easing of restrictions and lockdown. Bounce had to save revenues to increase its electric vehicles fleet by the third quarter.

Foodtech start-up Dineout and property online platform Magicbricks had furloughed its employees across various business roles based on the performance. Magicbricks has laid off close to 250 employees since May 2020.

Food aggregators platform Swiggy and Zomato despite kickstarting their hyperlocal deliveries and grocery deliveries could not insulate from the losses.

Swiggy in 2020, had to lay off 350 executive shedding and almost 1100 job functions nationally. To revive the business Swiggy focussed on realigning its resources to the potential areas where business could be stretched to its pre-covid levels, but the food industry could not pull its socks even up to 50 percent which supposedly made Swiggy go ahead with the layoff.  In May 2020, Zomato had to trim its workforce by 13% and cut salaries.

Ambiguities regarding the reopening of gyms have hurt health and wellness start-up Cult. fit. To ensure business continuity, it had to furlough 600 of its employees comprising fitness instructors and housekeeping staff. Cult. fit is trying to build its financial health by investing more tech capabilities.  It has also closed several cloud kitchens of Eat. fit- its subscription-based food delivery service.

 Packaging materials B2B marketplace Bizongo has laid off several capable and highly valued teammates as part of Covid-19 induced cost-cutting measures.

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According to the Centre for Monitoring Indian Economy (CMIE) data, the unemployment rate was recorded at 6.9 percent in February 2021.

Why the layoffs?

We can witness that the wrath of the pandemic has spared verticals and has impacted the continuity of business across verticals costing people their livelihoods. Currently, the start-ups are battling for survival and are brainstorming to foray into new customer segments or innovate products and services to suit the current needs of the consumer. To develop new business capabilities, they want to save money for which layoff seems the only solution. In such cases, if several start-ups are continuing layoffs, they should collaborate to form a common database of recently laid-off employees from various companies along with their expertise. Suppose if a start-up wants to bring innovation in its product and services or launch a new business model it might require the expertise of an employee who earlier worked in the same job role in his/her previous start-up and now it does not need it anymore. In such a case, the start-up can hire him/her and cushion the impact of unemployment.

Shalmoli Sarkar
Shalmoli Sarkar
An MBA in marketing and a BTech in chemical engineering, Shalmoli writes on marketing strategies and business technology for new and aspiring entrepreneurs.

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