Startups retain core techies despite layoffs

Cost Cutting Measures

- Startups sacked over 4,000 staffers

- Many of the layoffs in edtech and e-commerce spaces

- Majority of retrenched absorbed in some other firms

- However, demand for technology talent remains high

Bengaluru: Less number of engineers are victims of layoffs that are currently being done by Indian startups as these new age companies are making every effort to retain core engineering functions for the in-house operations.

Rather, jobs in support functions like sales, administration and finance among others are being slashed as startups are trying to save cost for facing an impending downturn in funding.

"When volumes come down, companies will require less numbers of support and sales staff. In technology, the team size is always small. Also, when the business scales up, requirement of additional engineers is also less as compared to support staff. So, engineering team is not likely to be scaled down even if volumes are reduced," Navin Rungta, co-founder at LawGro &Lagaan told Bizz Buzz. Rungta, whose firm helps startups in regulatory compliance matter, also said that layoffs are limited to certain segments of startups.

"Once schools open, students may not be keen to continue with online education. The (edtech) model also takes some time to see to gauge the effectiveness. Similar is the case in e-commerce. When stores are closed, there was a spurt in demand for online deliveries. But when stores are opening up, the demand will definitely come down. A short-term spurt in demand can't be a long-term sustainable model," he added.

In recent months, more than 4,000 staffers have lost their jobs as some startups have started laying off employees to save costs. However, many of the layoffs have happened in edtech and ecommerce space.

While edtech firms like Unacademy and Vedantu fired more than 1,600 employees, ecommerce firm like Meesho laid off around 150 employees from its grocery business.

Such laying off of staffers have created a negative sentiment in the startup ecosystem. Meanwhile, the close-knit startup community has geared up to help each other by absorbing the employees who lost their jobs in this round of firing. "Many of the people who lost their jobs are being absorbed on other such companies. The community is working overtime to make sure that such negativity doesn't impact the overall perception about the ecosystem," said a highly-placed HR manager.

There is also no change in hiring sentiment among the startups as demand for technology talent remains high. "We get the feedback that companies are valued better now as costs have gone up. So, fund raising is going on contrary to the information available on the public domain," said Rungta.