IT companies, startups ring in HR winter
While the IT bigwigs that storm campuses are shying away from campuses this year, startups are resorting to job cuts to desperately cut losses and keep their heads above water
The Indian IT sector that is plagued by global macro uncertainties and startups ravaged by funding draught jointly present a human resource gloom with substantially lower hirings and outright job losses. While the IT bigwigs that storm campuses with a plethora of offers are shying away from campuses this year, startups are resorting to job cuts to desperately cut losses and keep their heads above water.
About 70 startups have been forced to axe as many as 17,000 jobs between them. The reason is clear: they have to conserve cash and slash costs in the face of fast-drying-up funding sources.
The funding crunch has been so severe that this year that the country is yet to witness a single unicorn in the first half. In contrast, 44 startups in 2021 and 25 in 2022 emerged as unicorns – companies that surpassed a valuation of $100 billion.
According to PWC estimates, funding for startups that zoomed to $18.3 billion in the first half of 2022 nosedived to $3.8 billion, driving startups to run for survival strategies. “The funding crunch is the biggest challenge for these startups with a dearth of new investments flowing into the industry,” said Aditya Mishra, MD and CEO, CIEL HR.
The sectors that have seen most job cuts are edtech, e-commerce such as grocery delivery, fintech, logistics tech and health tech. Companies such as Byju’s, Meesho, Unacademy, Swiggy and SharChat have axed employees. Byju’s has sacked employees between 500 and 1000 in the first half of this year. The company is preparing to axe another 2,500.
“All investors are asking their portfolio companies to improve on unit economics and look at sustainable growth as against growth at any cost,” Co-founder of CarDekho Group Amit Jain had told ToI earlier.
The IT companies have intensified HR woes. Infosys and Wipro, two of the biggest IT services bell weather companies have not visited any campus this year. In fact, the Business Standard reported that both these companies would miss the placement season for the second year. The few firms that are indeed visiting campuses are not coming with firm job offers.
TCS, the country’s largest IT firm, is the lone IT bigwig that would hire about 40,000 in 2023-24 and therefore would be making trips to the campuses.
Some are indicating that even if some hiring takes place, it might take place in the off-campus period.