India’s ‘golden age’ of startups has suddenly come face-to-face with a rather rude reckoning: with capital drying up, as many as 11,600 layoffs have happened over the past six months. All of a sudden, the rose-tinted goggles are off and we are looking at the stark reality.
Risk Vs Reward
Even in the best of circumstances, joining a startup can be a bit of a gamble: it could turn out to be a stairway to heaven or, just as easily, a highway to hell! However, one aspect that perhaps could be somewhat better in quite a few startups is their manpower planning. Hiring indiscriminately when the funding is flowing in seems to be a common practice. Almost equally common, unfortunately, is the process of mass layoffs.
According to Ravi Gururaj, NASSCOM product and executive council, startups fire employees under three circumstances: they don’t have money and want to raise funds; they don’t plan properly and overhire, or they hire the wrong talent.
From the Horses’ Mouth: Employee Testimonials
“My company has been laying off people like crazy. They recently laid off 20 people from the marketing department. I have been working here for the last 4 years and now I am worried about my own job, maybe our department is next” says Ashutosh (name changed), an SDE-2 in a fintech startup.
To outdo other organizations, professionals are often lured in with the promise of fat paycheques and fatter signing bonuses. This can often be done to give the impression of a healthy, growing organization, something which can attract more investors. It is also a risky approach, as if hiring is done solely for a show of strength and not long-term productivity, it will eventually lead to a bloated organization weighed down by costs and overheads. And when the organization decides to start getting leaner, the picture is hardly pretty.
Yet another factor, especially for employees in pre-sales, sales, or business development, is that of unrealistic targets.
Ishaan (name changed), a former business development executive at a renowned ed-tech startup says “I was given a target of achieving sales 6 times of my CTC which was unrealistic and they fire employees who fail to achieve this target. I also got fired for the same”
Let’s Hear It from the Companies
Despite its plans to expand internationally, Cars24 recently laid off 600 employees
“This is business as usual: performance-linked exits that happen every year,” a Cars24 spokesperson said, declining to label this as a “layoff”.
Layoffs need not always be due to a lack of funding or losses to the company.
“The truth is”, an anonymous startup insider revealed, “that many startups tend to recruit indiscriminately, often purely as an exercise to position themselves as ‘big’. This can cause them to end up with more manpower than they need. Eventually, the company will streamline its operations in pursuit of growth and efficiency. Below par performers and employees who are simply not needed will be identified as dead weight and jettisoned.”
The Toll It Takes
Hiring and firing may be ‘business as usual’ for the organizations but it can be a traumatic experience for the employees: those who are laid off as well as those who’re living in fear of being next on the chopping block.
During the recent spate of layoffs in India, mental health startup ‘YourDost’ hosted a campaign to help people deal with their issues. In a span of three days, The portal received over 1,000 inquiries, including 260 calls and around 800 chats, a majority of them reporting depression and anxiety.
Losing a job suddenly can cause emotional trauma that takes time to heal. In addition, to shock and disbelief, there are feelings of sadness, anger, and the feeling of low self-esteem.
To Sum Up
Job security has always been lower in the private sector in India. Having said that, the current startup ecosystem has taken the sense of fear and insecurity to a whole new level. This has put employees working in startups under tremendous pressure, which also impacts their ability to function in their personal as well as professional lives.
In such a scenario, it helps to have a safety valve that can help you vent and pour your heart out. At the same time, sharing your concerns with the wrong people can prove dangerous. This is where Hood comes in: a pseudonymous social community where everyone is listening to what you say, but nobody knows who you are. Here, you can fearlessly share all that’s bothering you, without fearing that it could be traced back to you!