India’s coronavirus lockdown isn’t even over, but the impact on startups from the lack of business is already being seen.
Startups have begun giving employees pay cuts and laying off people as they attempt to realign with a world where their business might be impacted, and fundraising might be challenging. On-demand scooter rental startup Bounce said that it was cutting employee salaries by 20-60 percent. “We have announced salary cuts across the org other than those less than 3 Lakhs p.a,” said Bounce CEO Vivekananda HR. “The pay cut is graded based on salary. Needless to say, founders would take a 100% pay cut. This will give us run-way of beyond 30 months. Glad we raised money when we didn’t need,” he added.
We @bounceshare have announced salary cuts across the org other than those less than 3 Lakhs p.a. The pay cut is graded based on salary. Needless to say, Founders would take a 100% pay cut. This will give us run-way of beyond 30 months. Glad we raised money when we didn't need.
— vivek (@vivekanandahr) April 1, 2020
Bounce will be particularly hard hit by the lockdown: with people not allowed to venture outdoors, most of its fleet is presumably lying idle at the moment. In March, when the lockdown came into effect in the last week, Bounce’s ridership fell by 15 percent.
Online insurance company Acko, meanwhile, has laid off around 50 employees. “These are unprecedented times and we have to be prepared for a situation where the world is not normal for a long time,” Acko founder Varun Dua told ET. “Some business lines have been impacted and we don’t see them recovering for a long time and we’ve been forced to rationalise in those areas and consolidate a few teams and roles,” he added. Acko’s leadership team too has taken voluntary salary cuts between 50% and 70%.
Cloud communication firm Exotel has capped salaries at Rs 40,000 for the next two months and will look at the situation after a month to take further measures. “We are undertaking a few measures including salary cuts to ensure that we are able to tide over these tough times and emerge stronger as a company. To show our employees our gratitude and appreciation, we are also offering some compensation in the form of ESOPs,” said Shivakumar Ganesan, CEO of Exotel.
Online travel portals too are hit hard — with nobody buying tickets or booking hotels any more, their sales have also presumably plummeted. “We are reviewing our operating costs and plan to undertake multiple tough measures to keep overall expenses at a minimum,” a MakeMyTrip spokesperson said. “As the situation continue to rapidly evolve, we will continue to monitor impact closely and will accordingly assess compensation reduction for others while cushioning the impact for our front line staff.” MakeMyTrip founders Deep Kalra and Rajesh Magow have said that they will be not be salary from this month, while the rest of the leadership team will be taking a 50% cut in their compensation.