“I had just woken up, preparing for a regular, boring day at work. Except, at around 10 am, I got a link to join a Zoom call. On the other side of it, my manager informs me that my company, Goldman Sachs, was letting me go. The call ended in 10 minutes. And right after that, my access to all company systems was revoked.” This is the version of one of the estimated 700 employees recently laid off by the banking giant in India. This person spoke to The Indian Express requesting anonymity, citing professional reasons.
Thousands of other workers in the tech sector — that had boomed during the pandemic — have received similar news since the beginning of 2023. From workers at behemoths like Google, Amazon or Microsoft, to those working at storied startups like Swiggy, Ola and Dunzo, the recent wave of layoffs in the tech sector has barely spared a company.
Those working from home have been laid off over Zoom calls and Slack messages, and those in office have reported incidents where impacted workers have not been allowed to say a final goodbye to their teammates. Those still at these companies are uncertain, and wary of the next round of downsizing.
Google’s parent company Alphabet announced it was cutting 12,000 jobs, around 6 per cent of its global workforce. Then, Microsoft announced that it would be cutting almost 5 per cent of its workforce, impacting 10,000 employees. Before that, Amazon said it will be eliminating close to 18,000 employees, a number considerably higher than originally estimated. Salesforce announced it will lay off about 10 per cent of its workforce, roughly 8,000 employees, and close some offices as part of a restructuring plan.
To understand why tech companies are laying off workers now, turn back to the pandemic, when the industry was booming. In the two years of the pandemic, these companies saw record revenues coming in as people shifted to online services to get things done — from buying things on e-commerce platforms like Amazon to shifting their entire working day online on platforms like Zoom, Google Meet and Microsoft Teams.
This escalation also meant that demand for skilled tech workers during the pandemic rose, setting off a fierce competition between tech giants and startups alike to attract talent. From fat paychecks to perks including expensive superbikes, nothing was off the table. Then, there was the availability of abundant capital to startups, who used the money to ensure that even they could outbid the biggest global tech companies for skilled talent.
Then came 2022. The pandemic eased. Russia invaded Ukraine and central banks around the world started sounding the caution about an impending recession. Worse, these companies’ bet that the pandemic would be enough of a reason for people to move their entire lives online did not happen.
When Google let go of 12,000 employees, Alphabet CEO Sundar Pichai, in a blog post explained what exactly had gone wrong: “Over the past two years we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today.” Just a few months before this, Alphabet had posted lower-than-expected numbers for its third financial quarter, where it fell behind both revenue and profit expectations.
Similar reasons have been cited by the likes of Amazon and Microsoft, to a similar effect: cutting down roles across the board — from different teams, to people who have been at these companies for decades, to fresh college graduates.
For India’s startups, 2023 has been an extension of a year-long funding winter that kicked in in 2022. More than 20,000 workers at the country’s startups in sectors like edtech and e-commerce were handed pink slips in 2022 as investors who just a year ago had infused large sums of capital in the market pulled back.
Already in 2023, startups like Swiggy, which in January became a decacorn — a firm with a valuation of $10 billion or more — recently laid off 380 employees, and Google-backed ShareChat fired 20 per cent, or around 400 of its workforce. Cab hailing firm Ola, which had already fired more than 2,000 workers last year following a failed bid to scale up its quick commerce vertical, let go of 200 employees earlier this year.
“We concluded our performance cycle in October and have announced ratings and promotions at all levels. As with every cycle, we expect exits based on performance,” a Swiggy spokesperson said in a statement. The layoffs also came on the back of Jefferies reporting that Swiggy’s losses during H1 FY23 were six times higher than Zomato’s standalone losses during the same time.
“Since our launch eight years ago, ShareChat and our short video app Moj have seen incredible growth. However, even as we continue to keep growing, there have been several external macro factors that impact the cost and availability of capital,” ShareChat said. Since the announcement, its co-founders Bhanu Pratap Singh and Farid Ahsan have stepped down from their active roles in the company.
An Ola spokesperson said the layoffs were because the roles had become redundant. “We regularly conduct restructuring exercises to improve efficiencies, and there are roles which are now redundant. We will continue making new hires in engineering and design including senior talent in our key priority areas,” said the person.
Where once big valuations were being discussed and decided upon on WhatsApp texts, incidents of alleged corporate fraud at startups like BharatPe meant that investors upped their due diligence before putting money in a startup. 2023 has already seen an example of a startup that in the quest of growing too fast, committed errors in financial reporting to show bloated numbers to its investors.
High flying car servicing startup GoMechanic’s founder Amit Bhasin admitted to financial reporting errors at the Sequoia-backed car repair startup and stated that the cash-strapped company will lay off roughly 70 per cent of its workforce while also having its accounts audited by a third party.
“Our passion to survive the intrinsic challenges of this sector and manage capital, took the better of us and we made grave errors in judgement as we followed growth at all costs, particularly in regard to financial reporting, which we deeply regret,” Bhasin wrote in a LinkedIn post. He later edited the post to remove the word ‘grave’.