After Startups, Is The Layoff Wave Growing In Corporates Now?
Luck or unfortunate as it sounds, YES you heard it right after Twitter, there hasn’t been any stopping. Yesterday Meta also laid-off 13% of its workforce, accounting to 11,000 employees. Alongside, many Indian IT companies have held back the joining of fresh candidates too.
What’s The Scenario Like?
Layoffs are becoming the standard response of businesses to problems. Automation and intensifying global competitiveness are driving the change in the work environment.
Twitter layoffs raise questions about the future of infrastructure and moderation. The layoffs at Twitter and Meta are also calling into question platforms ability to keep it safe and secure as various of “egregious” failings. Both companies are currently overshadowed by bad publicity, loss of knowledge, weakened engagement, higher voluntary turnover, and lower innovation.
“Due to funding winter, startups on the other hand are cash strapped and some of them went behind the topline growth without bothering to be profitable which is not a sustainable model on a long term basis. Layoffs in startups will lead to a big dent on the brand image and may become difficult to attract talent in the future,” explains Sunil C, Chief Executive Officer, TeamLease Digital.
Leaders across industries are actually aghast at the nonchalance. But this is not the first, nor will be the last, such act of medieval practise where the king could summarily order “Off with his head”. We have witnessed blood baths in various cycles, including one in the wake of Covid. #Exit calls are always difficult and must be made but can be dealt with far more sensitivity than what big bosses typically do. And then the hypocrisy of leadership, culture, rewards for self, it is terrible!
Now, if we analyse from a student’s perspective, its actually a shocker for them and their families who are paying hefty amounts to prestigious institutions to help land their kids high paying jobs where the spent amount can round back to them in a lesser time span. Seeing the scenario where people in huge numbers are rendered jobless over one zoom-call, accounts for trust issues within kids and their families as to whether they should invest in their kids education heftily or not.
Consequences Of Recession On Job Market
The world’s biggest economy, the US, is technically in recession (negative growth for two continuous quarters) with factories dialling back production and job cuts increasing. In a desperate bid to prevent a ‘long recession’ expected by the end of this year, few month back the UK went in for the sharpest interest rate hike in a quarter of a century, while Germany has witnessed the biggest drop in consumer spending since 1980.
Economists are of the view that if the world goes into recession, India too will be hit!
According to Sunil C, “from an employee’s point of view, one should stick to the jobs they currently are in and try to increase their contribution as much as possible. If employees can take additional responsibilities/projects and contribute to the organization’s agenda of increasing utilization it would be an added advantage and will definitely get rewarded when situation improves. New job seekers should take up jobs where they get selected and not try to bargain with multiple offers as they may end up without a job.”
From retaining standpoint, experts are of the view that it has always been a challenge for biggest of the conglomerates also and it still will be.
Whereas Sunil C on the other has a slight varied view, “attrition will come down as employees will be adopt a cautious approach when it comes to changing jobs. We might still see some level of attrition but definitely much below the rate what we saw in the previous few quarters.
Supporting Sunil’s statement, RP Yadav, CMD, Genius Consultants, “recession is temporary that is what we have learnt from the history. In fact in America the recession has come down by 0.8 per cent and further the resignation will also come down for sure.
Road Ahead
Kunal Patil, CEO & Co-founder, WorkIndia believes that the only way to combat this issue is by planning the financials well and in advance! Work towards a profitability margin and have proper cost-benefiting initiatives.
Throwing light upon ongoing layoff scenarios, Sunil states, post pandemic most of the non-tech organizations have embarked on digitization drive to remain relevant in the market owing to the consumer expectations, they need tech talent to achieve these goals. In a good market conditions, IT sector & start ups were paying exorbitant salaries and hiring them but now is the opportunity for the non-tech sector to hire them.”
“Remove fluff expenses, have a contingency plan in place, hire properly and be precautionary with finances.” Supporting Patil’s views, Yadav explains by quoting example of Byju’s. According to him, the layoffs at Byju’s are not result of the ongoing recession, its because of the recent takeovers which have taken place at Byju’s from the same field. As a result, the people became surplus and hence layoffs were deemed to happen.
Lastly, laying off is not the only way to reduce the cost, the largest cost for IT and service-oriented company is the employee cost. Improving productivity should be one of the measures that organizations should adopt apart from cutting discretionary spends.
Yadav cited that the cost can be reduced by other means also. For example Byju’s spends thousands and crores in sponsoring cricket match, this could have been avoided.
