Startups brace for second round of layoffs

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Mudit Singhal, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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Indian startups are expected to handout punk slips to hundreds of more employees this year as they brace themselves for another year of drastic belt-tightening owing to pressure from investors to restructure operations. most of these job cuts are results of increasing automation of daily routine tasks and mergers and acquisitions both past and anticipated by industry experts for this year.

For investors, it brings them more than one reason to cheer: In addition to lowering expenses for startups, the layoffs will force firms to focus on hiring high-value experts having niche skills crucial to advancing growth.

Sanpdeal, Zomato and Cardekho have axed employees over the past eight months to minimize costs and foster healthier balance sheets for the financial year of 2015-16. As Employee costs form a major portion of about 35% of cash burn rate at startups as per industry experts, this was bound to happen as VC’s who had invested huge sum of money have  now started to doubt over returns they would get from these startups. Foodpanda, Commonfloor are also on the list of statups who have laid off employess in past year.

Well, all this makes talks about E-commerce bubble bursting someday more sensible and frequent.

References:

http://economictimes.indiatimes.com/articleshow/51870626.cms

 

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