Google-backed Indian social media startup ShareChat on Monday said it is laying off 20% of its workforce to prepare for oncoming economic headwinds. The move comes less than a week after two of Google’s subsidiaries Verily and Intrinsic started laying off staff.
“…. we need to prepare the company to sustain through these headwinds. Therefore, we’ve had to take some of the most difficult and painful decisions in our history as a company and had to let go of around 20% of our incredibly talented employees who have been with us in this start-up journey,” a ShareChat spokesperson said in an email statement.
The company, which claims to have tried optimizing costs for the last six months across different divisions including marketing and infrastructure, expects macroeconomic conditions such as the pandemic and geopolitical turmoil to have a negative impact on costs and availability of capital.
“The decision to reduce employee costs was taken after much deliberation and in light of the growing market consensus that investment sentiments will remain very cautious throughout this year,” the spokesperson said.
The decision to downsize is expected to impact over 400 employees out of the company’s 2,200-odd staffers. The company did not disclose the roles and the exact number of employees impacted by the decision.
ShareChat is offering a financial package to impacted employees, which includes the total pay for the notice period, two weeks’ worth of ex-gratia for every second year served with the company, 100% of variable pay till December 2022 among other benefits, the company said. ShareChat will also let outgoing employees keep the laptops and other assets given to them by the company.
Other benefits include health insurance policy cover till June 2023, leave encashment up to 45 days, and ESOPs vestment to continue as per schedule till April 30th 2023.
ShareChat, which was founded by Farid Ahsan, Bhanu Pratap Singh and Ankush Sachdeva in 2015, has raised a total of $1 billion in funding till date. The company, which also owns the short video platform Moj, raised $300 million in May last year.
Several Indian startups such as Ola, Byju’s, Pharmeasy, PayU, Vedantu, have seen layoffs since the middle of last year akin to downsizing decisions taken by startups and technology companies in the US.
Layoffs in technology companies became a regular phenomenon towards the end of 2022 and continued in the first weeks of 2023 as companies feared economic slowdown due to variety of factors such as the pandemic, geopolitical tensions and natural disasters.