India tech workers brace for lay-offs as global slump hits firms from Amazon to Twitter
- A global economic slowdown has spooked investors whose cash fuelled aggressive hiring in the tech sector during the pandemic years
- Edtech firms have been among the most affected in India, but even as anxiety grips start-ups, some observers believe the tech sector’s struggles are only temporary
For Ashish Jain, an employee at the Hyderabad office of a New York-based tech start-up, the realities of the tech crunch sweeping the globe meant a swift, unceremonious exit from a job he had taken up just seven months before.
“I had received good comments on a project we had completed the day before I was laid off,” he said.
“All of a sudden, I got a call from HR telling me I was losing my position ... They told me that the recession in the US has impacted the company and we had to downsize the team.”
His dismissal last month was so abrupt that even his manager was caught unawares, he said. “Everything happened so quickly. They just revoked my credentials and access from the system, but my manager had yet to be informed.”
Indian cities from Bangalore to Hyderabad and capital New Delhi are home to hundreds of thousands of young tech workers hoping to break into top positions in a sector valued at US$225 billion.
Edtech takes a beating
Simran (name changed upon request) was let go from a major edtech firm in November. She told This Week in Asia that the lay-off was not completely unexpected.
“I had coworkers and friends from other [edtech] companies who had been laid off that were sharing their experiences of being fired online,” she said. “I felt so anxious, it was as if I was just biding my time.”
Inc42 reported that over 7,500 employees have lost jobs with the downsizing of edtech this year, with at least five start-ups stopping operations.
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“The [tech] sector had been booming in India for the past few years and as a professional, it almost felt like you could take your pick of which job you wanted,” said Simran.
“But now, it seems that the fall in the global economic situation meant these start-ups cannot sustain holding on to the large number of people they hired during the boom.”
“Companies have to now adjust to the new economic reality of a world facing an ongoing war, supply chain issues, and macroeconomic factors pointing to signs of a recession,” said Professor Chandrasekhar Sripada at the Indian School of Business (ISB).
Meanwhile, funding for a lot of tech start-ups – a honeypot for investors during the pandemic – has dried up.
As a result, the valuations for these companies are now less healthy, forcing them to announce redundancies.
“Funding-scenarios are changing for these companies, pushing them to downsize and go back on expansions,” said Shrijay Sheth, co-founder of LegalWiz.in, which provides legal and compliance services to tech start-ups in India.
During the pandemic, investors and companies focused on speedy digitisation and hired aggressively to transform their businesses into digital-first models to feed a global public who were stuck at home.
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As priorities shift, Sheth said, it is the workers who were last in the door that are now on the chopping block.
For edtech companies, the warning signs were already apparent and experts suggested that India’s educational tech sector grew too fast, too soon.
“During Covid, edtech became the big new thing in India, and every [venture capitalist firm] wanted a horse in that race,” Sheth said. “They were all eyeing an investment and looking for an edtech company in their portfolios.”
Investors shy away
Investors are losing interest and that is being reflected in these companies’ dissipating valuations and declining profits, according to Sheth.
For example, online education giant Byju’s had raised about US$6 billion from a number of venture capitalist firms, giving it a US$22 billion valuation.
But when the Silicon Valley-backed company’s annual report for the financial year ending March 2021 was released in September following a lengthy delay, it showed a net loss of 45.6 billion rupees (US$573 million).
Hitching its hopes on a return to profitability by March 2023, Byju’s has slashed 2,500 jobs across its 50,000-strong Indian workforce.
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ISB’s Sripada says there are harsh lessons to be learned from the tumultuous state of India’s job market in recent months.
Young, ambitious and armed with degrees from top local and international universities, India’s tech workers might now become more circumspect about who they work for, evaluating employers for long-term sustainability instead of the buzz attached to them.
Employers will also have to be more careful not to hire too many workers during economic upturns and display greater compassion when lay-offs are required, Sripada said.
“[Employers] cannot just hand out pink slips,” he added, in reference to notices of dismissal and Elon Musk’s massive overnight lay-offs at Twitter.
Workers are also increasingly able to voice their grievances about a company’s work culture or unfair practices on social media and in other public spheres, experts said.
When Byju’s announced that it would discontinue its operations in the city of Thiruvananthapuram in Kerala, 140 of the company’s employees staged a protest that caught the attention of the state’s labour minister, who opened an investigation into the matter.
Days later, Byju’s announced that it would not close the office.
Experts say the struggles facing India’s tech sector are temporary and that the industry, which thrives on innovation and problem-solving, will get back on its feet.
There will continue to be room for new start-ups – and for funding – in India as its economy continues to show growth prospects in the long term, Sripada said.
And some companies are remaining bullish in the face of the global funding crunch.
Harsh Jain, the co-owner of Indian fantasy sports platform Dream 11, tweeted in early November offering jobs to Indian tech workers let go by tech firms in the US.
“With all the 2022 tech lay-offs (52,000+!) in the US, please spread the word to remind Indians to come back home (specially those with visa issues) to help Indian Tech realise our hyper-growth potential in the next decade!”
