ShareChat cuts 20% of its global workforce, 99% layoffs in India

Investors have become more circumspect of high valuations in a turbulent stock market that has hammered tech shares across the globe

MohallaTech, that operates the social networking and regional content platform ShareChat and short-video app Moj, announced that it has laid off around 20% of its staff. A spokesperson of the company confirmed that this amounts to about 500 job cuts out of a little over 2,200 employed across ShareChat’s offices in India, the US, and Europe. However, 99% of employees affected are in India.

“Keeping these (external macro) factors in mind, 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 statement issued by the company said.

The exit package offered by the company includes the total salary for the notice period, an additional two weeks’ pay as ex gratia for every year served with the company. and 100% of variable pay till December 2022. This apart, the retrenched employees have been allowed to encash the current gross salary for their unused leave balance of up to 45 days. The affected employees will also be allowed to retain their ESOPs that vest up till April 30, 2023,.

Health insurance policy benefits offered to the employees will remain in place until June-end and employees will be allowed to retain their work assets, such as their laptops, the company statement added.

“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. At the same time, we are doubling down on our efforts behind advertising and live-streaming revenues. With these changes, we aim to sail through the uncertain global economic conditions over 2023 and 2024 and come out stronger,” a company spokesperson added.

The layoffs at the 2015-born Bengaluru-based startup comes at a time when investors are urging many new-age companies to cut costs amid global economic uncertainties.

“Capital crunch is in my view the primary reason for most of the layoff announcements. Firms that do massive layoffs could be doing so due to surplus hiring during the pandemic, inflation, fear of recession, and slow business growth. Currently, companies are either focusing on restructuring, cutting costs, or testing new methodologies,” said Yeshasvini Ramaswamy, serial entrepreneur & CEO, Great Place to Work, an institute for workspace culture.

The startup market has witnessed layoffs in the last few months. Analysts also blamed the flawed management and hire and fire tendencies of these firms.

“The trend observed is that startups and unicorns have done mindless hiring without proper HR strategy and manpower planning in place. Now because of economics not working, stagnancy in the market, and fear of recession, companies are firing employees,” said Pratik Vaidya, Founder, and Managing Director, Karma Management, a tech-enabled HR & compliance services company.

“This is just a market correction. Companies hired indiscriminately at obscene salaries, expecting a big demand. Now, they’ve stopped hiring for new projects - only backfilling replacements - so the velocity has reduced. Those overpaid are the most vulnerable as cost-cutting is more practical,” said Achyut Menon, a global hiring expert, and managing director at Options Executive Search.

ShareChat did not respond to DH’s query on these criticisms.

Employees affected by the lay-off have started taking to social media platforms including LinkedIn to express their discontent while also looking for new jobs.