E-commerce startup Meesho cuts 15% workforce, cites judgement error in hiring

Softbank-backed e-commerce unicorn Meesho has announced its third round of job cuts in just over a year, leading to the termination of 251 employees, which represents around 15 per cent of its workforce.

“We have taken a difficult decision…as we look to work with a leaner organizational structure to achieve sustained profitability,” a Meesho spokesperson told DH.

Earlier, Meesho had fired 150 employees in April last year after it rebranded its grocery arm from Farmiso to Superstore. Then in August, it fired another 300 people as it announced the closure of its grocery business. The latest round is, however, the first one at Meesho's marketplace model, its core business.

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In an email dated May 5, Vidit Aatrey, Meesho’s co-founder and chief executive officer informed the company's staff about the decision, citing a challenging macroeconomic environment. DH has reviewed a copy of the email.

"As leaders, we made judgment errors in over-hiring ahead of the curve. At the same time, we could have run our organisation structure in a more effective and lean manner overall," 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's 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.

The employees impacted will receive an email in the next 60 minutes, letting them know about the status of their employment with Meesho, the email read. Following that, meeting links will be shared personally to facilitate one on one conversations between the staff members and their managers. Outgoing workers will, however, have access to Gmail and Slack channels till Sunday evening.

“We are committed to ensuring all those impacted have our full support and will be provided a separation package that includes a one-time severance payment of 2.5 to 9 months (depending on tenor and designation), continued insurance benefits, job placement support and accelerated vesting of ESOPs,” the spokesperson added.

As part of the package to outgoing employees, employees will receive full pay for their notice period and an additional one month, along with a tenure-based payment of 15 days pay for every completed year of service, rounded up to the nearest year, as per the email. The company said it will also extend family insurance coverage till March 31, 2024, and will relax ESOP vesting norms so the departing employees remain shareholders in the company.

In addition, for employees who relocated to Bangalore from January 1, 2023, to May 5 2023, reimbursement will be provided and the claim amount will be paid as an allowance to cover the cost of relocation back to their hometown. The company also claimed to offer placement support for all laid-off employees.