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Journalism of Courage
Google has started laying off employees in India and handed pink slips to around 450 workers across its offices in the country. The company sent emails to impacted employees on Thursday (February 16) evening, sources told The Indian Express. The action has impacted workers across functions such as sales, marketing and partnerships.
The move comes after Alphabet Inc, Google’s parent company, announced cutting 12.000 jobs or six percent of its total workforce last month. At the time, the company had said that it hired “for a different economic reality” during the pandemic, when internet usage across the world had soared.
Currently, the tech industry is seeing a large-scale restructuring after over-hiring during the pandemic on the basis of the assumption that more people will continue to live large parts of their lives online. However, that does not seem to have happened – as the pandemic has eased, so have people’s online lives.
Meanwhile, as per a Bloomberg report, Twitter has shut down two of its three offices in India after firing nearly 90 per cent of its workforce in the country last year after Elon Musk’s acquisition of the company.
Alphabet had announced it was cutting 12,000 jobs, around 6 per cent of its global workforce. Then, Microsoft announced that it would be cutting almost 5 per cent of its workforce, impacting 10,000 employees. Before that, Amazon said it will be eliminating close to 18,000 employees, a number considerably higher than originally estimated. Salesforce announced it will lay off about 10 per cent of its workforce, roughly 8,000 employees, and close some offices as part of a restructuring plan.
To understand why tech companies are laying off workers now, turn back to the pandemic, when the industry was booming. In the two years of the pandemic, these companies saw record revenues coming in as people shifted to online services to get things done — from buying things on e-commerce platforms like Amazon to shifting their entire working day online on platforms like Zoom, Google Meet and Microsoft Teams.
This escalation also meant that the demand for skilled tech workers rose during the pandemic, setting off fierce competition to attract talent in tech giants and startups alike. From fat paychecks to perks including expensive superbikes, nothing was off the table. Then, there was the availability of abundant capital to startups, who used the money to ensure that even they could outbid the biggest global tech companies for skilled talent.
Then came 2022. The pandemic eased. Russia invaded Ukraine and central banks around the world started sounding caution about an impending recession. Worse, these companies’ bet that the pandemic would be reason enough for people to move their entire lives online did not pan out as expected.
When Google let go of 12,000 employees, Alphabet CEO Sundar Pichai, in a blog post explained what exactly had gone wrong: “Over the past two years we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today.” Just a few months before this, Alphabet had posted lower-than-expected numbers for its third financial quarter, where it fell behind both revenue and profit expectations.
For India’s startups, 2023 has been an extension of a year-long funding winter that kicked in in 2022. More than 20,000 workers at the country’s startups in sectors like edtech and e-commerce were handed pink slips in 2022, as investors who just a year ago had infused large sums of capital in the market pulled back.
Already in 2023, startups like Swiggy, which in January became a decacorn — a firm with a valuation of $10 billion or more — recently laid off 380 employees, and Google-backed ShareChat fired 20 per cent or around 400 of its workforce. Cab-hailing firm Ola, which had already fired more than 2,000 workers last year following a failed bid to scale up its quick commerce vertical, let go of 200 employees earlier this year.
“We concluded our performance cycle in October and have announced ratings and promotions at all levels. As with every cycle, we expect exits based on performance,” a Swiggy spokesperson said in a statement. The layoffs also came on the back of Jefferies reporting that Swiggy’s losses during H1 FY23 were six times higher than Zomato’s standalone losses during the same time.
“Since our launch eight years ago, ShareChat and our short video app Moj have seen incredible growth. However, even as we continue to keep growing, there have been several external macro factors that impact the cost and availability of capital,” ShareChat said. Since the announcement, its co-founders Bhanu Pratap Singh and Farid Ahsan have stepped down from their active roles in the company.
An Ola spokesperson said the layoffs were because the roles had become redundant. “We regularly conduct restructuring exercises to improve efficiencies, and there are roles which are now redundant. We will continue making new hires in engineering and design including senior talent in our key priority areas,” said the person.
Where once big valuations were being discussed and decided upon on WhatsApp texts, incidents of alleged corporate fraud at startups like BharatPe meant that investors have upped their due diligence before putting money in a startup. 2023 has already seen an example of a startup that in the quest of growing too fast, committed errors in financial reporting to show bloated numbers to its investors.
High-flying car servicing startup GoMechanic’s founder Amit Bhasin admitted to financial reporting errors at the Sequoia-backed car repair startup and stated that the cash-strapped company will lay off roughly 70 per cent of its workforce while also having its accounts audited by a third party.
“Our passion to survive the intrinsic challenges of this sector and manage capital, took the better of us and we made grave errors in judgement as we followed growth at all costs, particularly in regard to financial reporting, which we deeply regret,” Bhasin wrote in a LinkedIn post. He later edited the post to remove the word ‘grave’.
