The COVID-19 outbreak has not only affected our lives with terms such as social distancing, quarantine and comorbidity, but also propelled HR terms like salary/pay cut, layoff into becoming the new normal. In the wake of this pandemic, many employees have encountered the risk of being unemployed as businesses continue to remain shut for an unknown period of time. Start-ups in India in this scenario are the worst affected after the coronavirus pandemic has shut down entire sectors of the economy, drying up revenues and funding. In some cases, even after years of heavy spending and failure to turn profitable, many start-ups are now unable to secure capital to survive a prolonged crisis. “COVID 19 has thrown up challenges which have been most deterrent to startups. There are challenges in terms of product relevance, pricing relevance customer retention, supply chain disruptions, employee management and more importantly the burnout and runway plans made will no longer be relevant,” says Deepthi Ravula, CEO, WE HUB.

According to a report based on National Sample Survey (NSS) and Periodic Labour Force Surveys (PLFS) data, over 136 million jobs are at immediate risk globally. Gadgets 360 reviewed crowdsourced data collected by Big.Jobs from over 776 companies around the world, showing that most layoffs are coming from VC-backed tech startups and bootstrapped companies. Medium-level companies with between 200 and 500 employees are at highest risk of layoffs and salary cuts. Furthermore, companies falling in age 5-15 years have a higher risk than others, even more than the start-ups (age 0-1 years), as these may be hiring on a large scale to look for the faster growth at this age.

The Covid-19 blow appears to have forced even those start-ups and unicorns that have managed to raise new funding go for a leaner workforce, firing employees in thousands. For example, Foodtech Unicorn Swiggy, raised almost Rs 1,185 crore this year as part of its Series -I round. And yet, it had to announce its plans off late to let go of 1,100 employees, nearly 14 per cent of its workforce, spanning across grades and functions in the cities and head office as Covid-19 continues to hurt its business across verticals. “The biggest impact here is on the Cloud kitchens business, with many unknowns about volumes through the year. Since the onset of Covid-19, we have already begun the process of shutting down our kitchen facilities temporarily or permanently, depending on their outlook and profitability profile,” Sriharsha Majety, Co-founder and CEO, Swiggy, said in a statement announcing the layoffs.

Similar is the story of Zomato, another foodtech start-up and Lendingkart Technologies, a fintech start-up that recently announced a layoff of nearly 30 per cent of its employees even after raising over Rs 319 crore in Series D round of funding.

As per researcher Tracxn Technologies Pvt. Ltd, over the past two months, more than 250 start-ups have already shut shop. It is also believed that the numbers may rise sharply in the coming months. While smaller start-ups are certainly facing the brunt of the lockdown, even unicorns are unlikely to remain unharmed. The pandemic has posed the biggest challenge for the start-up ecosystem, with about 90 per cent of firms reporting a decline in revenues, 30-40 per cent temporarily halting operations or are in the process of closing down, and 70 per cent having a cash runway of under three months, a survey by industry body Nasscom showed.

It has affected early-stage and mid-stage start-ups the most, the survey said, with those in edtech, fintech and health tech reporting a significant boost to their businesses since the lockdown started. Startups in the travel and tourism, events and hospitality are the worst hit, and there seems no signs of these sectors coming back on track anytime soon. “The impact of the pandemic on startups will be two-fold: one on the business side of things and the other on the investment side. Sectors like hospitality, entertainment and food are bound to take a sharp hit as the demand for essential products and services will shoot up. These sectors will have to reinvent themselves to stay relevant. Even for technology startups, unless they are able to provide unique solutions to current problems, demand will probably be on the lower side,” says Sunil Kumar Maddikatla, Founder & CEO, BlueSemi R&D Pvt. Ltd.

With the entire world busy combating the deadly virus, the need of the hour for start-ups is to align strategies and plan their way forward. We can only hope for a quick recuperation from this loss.