In India, the year 2022 saw thousands of layoffs across new-age sectors, which not only impacted the economic, social and living conditions of the employees working in Indian startups but also their mental health
It is highly likely that the retrenchments in 2022 was a way to show investors that the startups were serious about making money and taking several cost cutting measures amid a funding winter
Issues like fears of joblessness, financial insecurities, and reports of mass layoffs globally increased anxiety-related disorders in the last 6-8 months of 2022, so much so that 4 to 6 out of 10 professionals had to seek professional help
The job of Animesh, 27, (name changed upon request) was going well as a sales representative at India’s largest edtech company, BYJU’S, when the Covid-induced lockdowns hit the nation in 2020 and the economy got trembling on its knees. Ironically, after the Covid-hit nation returned to business as usual, Animesh and many of his colleagues were asked to leave by the edtech giant.
The layoff news came as a shocker for him and his team because they have been doing everything right to boost the revenue of their company – ranging from meeting and overachieving targets to exhausting 11 hours a day at work.
“In 2022, at a time when we were expecting a raise for all our hard work, we were shown pink slips. The ones who were left behind were given unrealistic targets. As a result, by November, the employees who weren’t laid off yet decided to leave the startup to join companies that could assure some stability,” the former sales executive at BYJU’S said.
Animesh’s story is similar to many who were able to sustain their livelihood during the Covid-induced lockdowns but were let go in 2022, when things returned to normal.
In India, the year 2022 saw thousands of layoffs across industries such as edtech, ecommerce, and food delivery, among others, which not only impacted the economic, social and living conditions of the employees working in Indian startups but also their mental health. These layoffs were the result of startups shutting down or scaling down their operations due to a dearth of funds.
As per Inc42 ‘s layoff tracker, nearly 18,000 employees were laid off by Indian startups in 2022. At the forefront of these layoffs were the unicorns such as BYJU’S, ChargeBee, Cars24, LEAD, Ola, Meesho, MPL, Innovaccer, Udaan, Unacademy, Vedantu, and Zomato. And towards the receiving end, a workforce that was looking at a bleak future – from 100% salary hikes in 2021 to layoffs in 2022.
Experts opine that between 2020 and 2021, founders, after seeing a promising boom in the country’s digital adoption, which they thought would stay, started offering fat pay cheques to their employees and new hires, as a result, a bubble was created in the startup job market. When it collapsed, many were left jobless.
The Great Layoff Of 2022: Who’s To Blame?
Each company, founder, analyst and HR expert that Inc42 spoke with held weak investor sentiments responsible for the great startup layoff of 2022. They pointed out that challenges such as geopolitical tensions due to the Ukraine-Russia conflict and macroeconomic headwinds arising from interest rate hikes and fears of a looming recession forced investors to tighten their purse strings.
Investors who once bravely issued billions of dollars to startups suddenly started demanding accountability. Founders, who went aggressive on marketing campaigns, recruitment drives, and issuing hefty bonuses in 2021, had to show report cards to their respective investors.
According to industry experts, it is highly likely that the retrenchments in 2022 was a way to show investors that the startup founders were serious about making money, and that they had been taking several cost-cutting measures amid a funding winter.
“In 2021, startup founders went on a hiring spree, offered hefty pay packages and eventually ended up firing them, of course amid several uncertainties. The public announcements of companies coming one after another was set off by Better.com’s infamous layoff of 900 employees over a Zoom call,” said Kamal Karanth, the cofounder of Xpheno, in a recorded conversation with Thomas Abraham, the founder of a talent acquisition platform.
The layoffs in 2022 were not due to issues with employees’ performance, but more of an investor-pleasing exercise, he added.
Karanth’s views echo Animesh’s sentiments who said even the best performers were shown the door at BYJU’s in 2022.
At this point in time, the hardest thing to digest was that despite layoffs many startups were seen spending heavily on marketing, sponsorship campaigns, and paying millions of dollars to sports or film celebrities.
“Many unicorns continued spending on ads and signing brand ambassadors while slashing their headcount. This naturally gave rise to negative media coverage,” a seasoned corporate communications professional said.
According to Karanth, this time around companies started leaking layoff information to the press, which looked nothing more like a desperate PR stunt.
Layoff At Big Tech & IT Services Sector, Too, Impacted The Job Market?
The second half of 2022 set off a cycle of layoffs on a global scale across FAANG companies and the IT services sector, and India wasn’t alien to its impact.
According to various reports, Twitter’s new CEO Elon Musk fired 75% of the social media platform’s workforce in 2022.
Further, Meta, formerly known as Facebook, did not prove to be a consolation either. Amid rising costs and nosediving ad revenues, Meta slashed almost 13% of its global workforce, or 11,000 employees, last year.
In India, some IT bellwethers, including Tata Consultancy Sevices, Infosys, Wipro, and HCL, slowed down hiring in the April-June quarter of FY22, even as the attrition levels normalised from the highs of FY21.
In many ways, analysts began comparing 2022 with the Great Recession of 2008, during which as many as 65,000 tech workers lost their jobs globally.
Interestingly, in 2022, a lot of tech employees began to explore other livelihood options, while many switched from unstable high-paying startup jobs to more stable, lesser paying profiles.
In A State Of Anxiety And Fear
According to a recent report published by the Economic Times, issues like fears of joblessness, financial insecurities, and reports of mass layoffs globally have increased anxiety-related disorders in startup employees in the last 6-8 months of 2022, so much so that 4 to 6 out of 10 employees now seek professional help.
“This is a natural human response. In the face of everything that has been happening, including the fears of losing a stable source of income, many employees are falling prey to anxiety-related disorders. It is due to this fear that they are working more than what their bodies allow. Mental health counsellors have definitely seen a spike in employees’ anxiety levels, which is alarming,” said Ruchira, a Bengaluru-based clinical psychologist.
Animesh said he hasn’t had a good night’s sleep in months after losing his job. He added that he frequently finds himself giving frantic calls to HR executives of various organisations just to land a job for himself.
“I, along with my family, will have to make do with whatever little savings we have until I find a job that pays at par with my earlier company. With rising inflation, we have been forced to realign our daily budget. It has become all the more difficult to meet our daily necessities,” he said.
Animesh told Inc42 that the tale of employees who have not been compensated and have failed to find work so far is even more heart-crushing.
“Even though many companies promised placement support and good severance packages to their parting employees, not everyone has been lucky enough. Many laid off employees allege that they have not been paid for the last few months after losing their jobs,” he said.
Will 2023 Ward Off Layoff Anxiety?
In his recorded conversation with Abraham, Karanth was rather positive about job vacancies at Indian startups. He said that there are still 14,000 job openings in the startup market and new hirings haven’t seen much of a downturn.
Karanth said that the startup job market took a hit during the Covid-induced lockdowns due to a fall in demand for goods and services. But now things have returned to normal, and there is no reason to believe that the demand for talent will be any less in 2023, he added.
“Moving into 2023, the job market will require professionals to differentiate themselves with in-demand skills to stand out from their peers, whether it is to secure new jobs or to grow in their current jobs,” said Mohan Lakhamraju, the CEO of Great Learning, a professional learning platform.
Meanwhile, in its recently released Employment Outlook Report for Q4 (January to March, 2023), staffing firm Teamlease points out, despite the ongoing global inflation, India is leading with the highest hiring intent. Nearly 77% of employers, versus 73% in Q3, are keen to increase their resource pool in the services sector.
In comparison to Q4 2021, the intent to hire has risen 27%. Overall, across services and manufacturing sectors, an average of 68% employers (65% in Q3) have expressed a strong hiring sentiment, the report highlights.
The report adds that a positive hiring sentiment across ecommerce and allied startups, educational services, and the telecommunication sector will be seen in the next quarter, with more opportunities for entry-level employees and fresh graduates.
However, for already-sacked employees, like Animesh, such reports are meaningless, until their quest to find a well-paying stable job is finally over.