After Big Tech, layoff wave hits internet startups; Dunzo, ShareChat affected: Report

Not just big tech firms Meta and Amazon, the layoff wave which began last year is showing no signs of slowing down, and is instead affecting consumer internet firms and startups as they look to cut costs.

While Reliance Retail-backed Dunzo laid off 3 per cent of its employees last week, Mohalla Tech-operated and Twitter and Google-backed ShareChat announced on Monday that it laid off around 20 per cent of its workforce.

“Any decision that impacts people is tough, and always our last option. Last week, we had to part ways with 3 per cent of our team strength,” Dunzo co-founder and CEO Kabeer Biswas told The Economic Times.

Read | Over 24,000 employees laid off by 91 tech companies in 2023 so far

“They (company leadership) are finalising the details and are likely to close it this month. Costs have to be optimised across possible avenues. It’s very evident all startups are doing it having realised what’s happening in the market,” a person aware of the matter said.

“Almost everyone is going to do this (layoffs) even after last year’s layoffs. There are more startups that would have to opt for gradual firings,” a venture capital investor told ET, but said that this would perhaps be the last round of such job cuts.

“In the second quarter (April-June), we should see some improvements,” Anshuman Das, managing partner of executive search and advisory firm Longhouse Consulting, told the publication. “India was a little late to layoffs compared to the US. So, it will be another two-three-month activity. This quarter should be the same as the previous quarter. It may not bounce back, but the layoff trend should subside and we can see more hiring activity from Q2.”'

Read | Layoffs begin at Ola, 200 employees to be impacted

“Many thought more capital would continue to come to India despite the slowdown in the US,” Das said. “But many companies went out to raise money in the last six months and have come back empty-handed. Companies which had deferred their layoff plans are now finally going ahead with their plans.”

Big Tech firms like Meta and Amazon have had major layoffs recently, with Meta firing over 11,000 or 13 per cent of its employees, and Amazon letting over 18,000 people go worldwide.

While engineers are typically the last to be axed in a technology-led organisation, firms have had to slash positions in this department too, industry insiders told ET.

“Everyone went a bit over the top in hiring engineers and at an expensive price. Those decisions are now being corrected,” an investor said. Companies are firing across roles in marketing and operations as well.

“Engineering jobs being affected is a sign of deeper clean-up happening in the companies,” said Das. “Adding engineering talent is not easy, and the firing of engineers is a sign of structural change. Operations and sales jobs are more cyclical and engineering is more structural. If engineering jobs are getting affected, that means certain strategic initiatives that companies were pursuing may be winding down.”