Acko, Bounce, MakeMyTrip, others hardest hit by Covid-19 turn to layoffs, salary cuts
Cos said such measures are to keep biz running as there is no certainty to when things will be normal again
Companies, however, cited that such measures are mainly to keep businesses running as there is no certainty as to when things will return to normal. ET has reviewed the termination letters.
Online insurance firm Acko has laid off around 50 employees, a majority of whom work in the customer service, operations, sales and marketing segments. Responding to ET’s query, Acko founder Varun Dua said 45 people were “impacted”.
“These are unprecedented times and we have to be prepared for a situation where the world is not normal for a long time,” Dua said, adding that the leadership team has taken deep voluntary salary cuts between 50% and 70% to do what’s right in the interest of the majority. “Some business lines have been impacted and we don’t see them recovering for a long time and we’ve been forced to rationalise in those areas and consolidate a few teams and roles.”
ET has also learnt that cloud communication firm Exotel has capped salaries at Rs 40,000 for the next two months and will look at the situation after a month to take further measures.
"We are undertaking a few measures including salary cuts to ensure that we are able to tide over these tough times and emerge stronger as a company. To show our employees our gratitude and appreciation, we are also offering some compensation in the form of ESOPs," said Shivakumar Ganesan, CEO of Exotel.
US-based travel firm Fareportal has sacked about 500 employees in India. They were officially notified last week.
Online travel portals have been hardest hit due to the Covid-19 pandemic as countries around the world announced lockdowns and airlines halted operations.
Ticket booking platforms like MakeMyTrip, Cleartrip, ixigo and hospitality chain Fab Hotels are among the companies looking at salary cuts while a few others have started sacking staff, according to data sourced from Big. Jobs—a job portal.
“We are reviewing our operating costs and plan to undertake multiple tough measures to keep overall expenses at a minimum,” a MakeMyTrip spokesperson told ET. “As the situation continue to rapidly evolve, we will continue to monitor impact closely and will accordingly assess compensation reduction for others while cushioning the impact for our front line staff.”
Deep Kalra and Rajesh Magow have said that they will be not be salary from this month, while the rest of the leadership team will be taking a 50% cut in their compensation.
Last month, ET had reported that startups including Bounce, Drivezy and Udaan have cut staff to stay afloat.
Bounce had laid off employees since December last year. It now anticipates that the current lockdown and slowdown in markets will last for the next 6 months. Bounce said it would be looking at pay cuts of 20-60% to ensure 30-32 months runway for the business.
We @bounceshare have announced salary cuts across the org other than those less than 3 Lakhs p.a. The pay cut is gr… https://t.co/KZ2iqIuhR7— vivek (@vivekanandahr) 1585727126000
The founders would be taking a total salary cut, the bike rental startup said.
Another scooter rental firm Vogo had also cut staff in December, but has denied any layoffs or pay cuts so far due to the ongoing Covid-19 crisis. Both Bounce and Vogo saw a 10-15% drop in ridership in March.
Big.Jobs' data showed that companies such as used car online marketplace Droom, rental platform Rentomojo and edtech firm Adda247 are also looking at salary cuts and layoffs.
Adda247 said that it did a “rightsizing exercise” in January but denied laying off 150 employees. Other companies did not respond to ET's queries.
Droom's employees will take a 15% salary cut from this month while there are no plans of laying off, said the company.
A number of these startups said they will revise their plans after the 21-day lockdown is over and gauge the situation. A number of unicorns have also rescinded offers amid the Covid-19 crisis.