Job Market Scenario In Post-Pandemic: Great Resignations To Layoffs
Layoff in Startups
2022 did not begin well for the larger economic world, as a global sell-off pressure stirred a stock market crash. This has consequently seen startup funding slow down to a trickle. The first quarter of the year noticed Indian startups raise $11.7 Billion in funding, minting 13 unicorns. Nevertheless, April only saw about $3.4 Billion in funding, with no unicorns being produced. While May witnessed the minting of India's 100th unicorn, it has been a slow month in terms of funding, with only $1.6 Billion brought in, falling 53 percent month-on-month. June saw three startups added to India's growing list of unicorns. In some relief to the startup ecosystem, the funding picked up by 69 percent to hit $2.65 Billion in the month.
Hence, during H1 2022, India has seen almost $19 Billion in startup funding. Though, during H2 2021, Indian startups secured $31.58 Billion in funding or nearly 70 percent more than H1 2022. The funding momentum towards the end of 2021 had fizzled out. The slowdown stirred marquee investors such as Sequoia, KKR and Y Combinator to guide the startups in their portfolios on how to persist. Almost every investor was giving a clear message cut costs and increase runway.
With the value of bitcoin, ethereum and other famous currencies falling sharply, startups in the risky cryptocurrency space are at the fore of layoffs
Many of these startups interpreted that as consent to fire people as a `cost-cutting exercise', disrupting thousands of livelihoods in the process. As of now, 11,168 employees have been laid off by 32 Indian startups, which count unicorns such as Cars24, Ola, Meesho, MPL, Trell, Unacademy and Vedantu. The list also includes Indiabulls' social commerce venture Yaari. In May alone, layoffs by nine startups were reported to have impacted 3,379 employees. So far, June has seen layoffs by 18 startups. Yet, fewer employees are affected than in May at 2,409. Edtech has seen the most layoffs, led by consumer services and ecommerce. It demonstrates that almost nine of ten employees laid off worked in consumer services, e-Commerce or edtech.
The funding slowdown has affected edtech startups disproportionately. Along with laying off almost 4,100 employees, it has also noticed two companies closed as well. The result is that edtech has taken the most heat across all the industries.
Tech giants lay off workers
The economic meltdown has reached Big Tech, and Satya Nadella run Microsoft has become the first tech giant to lay off employees as part of 'realignment'. The layoffs at Microsoft reportedly affect nearly one percent of its 1,80,000-strong workforce across its offices and product divisions.
"Today we had a small number of role eliminations. Like all companies, we evaluate our business priorities on a regular basis, and make structural adjustments accordingly", Microsoft told Bloomberg. The firm added, `We will continue to invest in our business and grow headcount overall in the year ahead'. Microsoft has also slowed hiring in the Windows, Teams and Office groups.
Along with Microsoft, Google has slowed down its pace of hiring for the rest of the year. Alphabet and Google CEO Sundar Pichai has told employees that the company will be slowing down hiring for the rest of the year as global macro economic conditions continue to hit across industries.
Netflix Inc. said last month it's laying off about 150 workers after reporting an unexpected subscriber loss the streaming giant's shares have tumbled 71 percent since mid-November.
Cloud major Oracle recently considered laying off thousands of workers to save up to $1 billion in cost-cutting measures, the media reported. Twitter has also cut 30 percent of its recruiting team, while Elon Musk run Tesla has laid off hundreds of employees. Other tech companies that have slowed hiring include Nvidia, Snap, Uber, Spotify, Intel and Salesforce.
After many prosperous years of spending money without much worry about limits on recruiting employees, getting real estate in dreamy locations, enhancing conditions and lavish parties tech giants are suddenly slammed on the brakes and quickly recalculated their route.
Hightech companies in the United States were quick to respond and fired about 20,000 workers in a very shorttime. Giant companies such as Robinhood and Coinbase, which are on the seam between hightech and the capital market, fired thousands in one day. Giant companies such as Meta and Intel, whose stability is not feared have also announced a freeze on recruitment.
With the value of bitcoin, ethereum and other famous currencies falling sharply, startups in the risky cryptocurrency space are at the fore of layoffs. The illustrations of a rough new business climate are against the backdrop of a prolonged economic slowdown, grinding war in Europe and increasing interest rates & inflation.
Any slowdown in hiring requires to be framed within the context of tech's meteoric rise, says Stephen Levy, director and senior economist at CCSCE. "Does the world want more of the goods and services that tech produces, and is that a growth sector over time?" Levy added.`The answer is yes'.
Therefore, laying off workers proves that the fast growing industry is also not immune to the global economic slowdown. The malaise damages employee morale, affects the industry's ability to attract talent and has wide ranging implications for economic growth and innovation.