Udaan, a business-to-business commerce online startup, has laid off about 10-15%, or an estimated 3,000-3,500, of its contract staff, according to company executives and staffing agencies that ET spoke to.
The job cut is largely driven by the Covid-19 pandemic, which has significantly dented the company’s revenue from non-essential categories including electronics and apparel.
Udaan’s businesses also include fresh food and pharma which come under the essentials category. Last year, it had received a licence from the Reserve Bank of India for non-bank financing business.
“With the economy showing no or very weak growth signs for at least the next eight-ten months, operating costs have to be recalibrated,” said a company executive that ET spoke to.
Udaan confirmed the job cut while declining to disclose the number of employees impacted.
The company, however, said it would honour all campus placements and pending job offers. “We are adapting to the structural changes in demand in India which is impacting our current infrastructure … Driven by economies of doing business in a sustainable manner, we are compelled to restructuring our teams which has unfortunately made some roles redundant,” a spokesperson said in a statement to ET.
Disgruntled employees took to social media platforms including Twitter, Facebook and WhatsApp to share their termination letters, while expressing the fear of being unemployed in the current volatile environment. ET has seen some of the termination letters and videos.
Blue and grey, including entry-level white-collar jobs have been hit the worst after the outbreak of the COvid-19 pandemic.
Abhigyan Sinha, who said he was an employee of Udaan, tweeted on Saturday: “Udaan terminated us without any due notice or information and the reason being business challenges and cost-cutting.” Several other employees tweeted and put out videos alleging that no prior notice or severance pay was given. The company has also drawn a lot of flak on social media for its way of laying off employees.
Udaan, however, said it was providing a month’s gross salary as severance and medical insurance for three months to the laid-off employees.
Udaan raised $585 million in October from Tencent, Altimeter Capital, Hillhouse Capital, GGV Capital and Citibank along with existing investors Lightspeed Venture Partners and DST Global, which valued the company at close to $3 billion. This was also one of the largest late-stage investment rounds last year.
“The market is bad across the board, from a business and a fundraising perspective. The aim (for Udaan) is capital conservation and recalibrating fundamentals,” said an investor in the company, adding that the drive to cut costs had been ongoing for a few months.
Earlier this month, ET reported that the Indian Staffing Federation had urged the labour and finance ministries to take immediate steps to protect the livelihood of 33 lakh temporary workers in the country by easing regulations and statutory compliance.
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