Indian unicorns are shedding fat well into 2023 to navigate the ongoing funding winter.
Meesho has laid off 251 employees in a fresh round of layoffs. Meesho informed staff of the job cuts, which impact 15% of its workforce, through an email. The layoff comes after Meesho had fired 150 employees during the coronavirus pandemic, and had fired 250 employees last year.
“As leaders, we made judgement errors in over-hiring ahead of the curve. At the same time, we could have run our org structure in a more effective and lean manner overall,” Meesho CEO Vidit Aatrey said in his email. “Our spans and layers were inflated, and this could have unintended consequences on our speed to execute. While we are confident that Meesho business will stay strong, the economic reality is here to stay. We are now faced with the hard truth of aligning our people costs with the new projections for our business. We should have done better here,” he added.
Meesho had previously laid off 150 employees, or nearly 20% of its then-workforce, in 2020 due the the near-shuttering of non-essential delivery business during the duration of India’s two month long Covid lockdown. The company had then started a grocery delivery arm to meet people’s essential needs, but had laid off 250 employees from the grocery business last year. The latest layoffs of 251 employees are from Meesho’s core marketplace business.
Meesho is valued at $4.9 billion, and is one of the highest-valued startups in India to lay off employees this year. Meesho is also India’s second-highest loss making unicorn with losses of Rs. 3,247 crore last year. Apart from Meesho, more than a dozen Indian unicorns including Swiggy, Unacademy, Moglix, Ola, Sharechat, CoinDCX, Rebel Foods and others have all laid off hundreds of employees this year.
These are alarming numbers, but it’s not only Indian tech companies that are laying off employees. Meta had laid off 10,000 employees late last year, and Amazon had said it planned to lay off 18,000. Other international tech startups, such as Salesforce and Twitter have also laid off employees, while larger companies like Google and Apple have instituted hiring freezes and laid off workers.
But the pain for Indian startups could be deeper. Most of these companies had become unicorns over the last few quarters, and until not too long ago, had been flush with cash. But even as they had begun spending lavishly and building their businesses, they realized their growth projections weren’t quite working out. As their cash reserves have depleted, they’re being to let go of people in order to cut costs. And with the funding winter still firmly in place, it might need a lot more more layoffs — even among vaunted unicorn names — for India’s startups to survive.