Swiggy, India’s biggest food delivery platform, is undergoing a restructuring as it looks to navigate the downturn that has forced firms to become leaner and more disciplined. The company plans to lay off 380 jobs and shut down its meat marketplace as it looks to focus on its core strengths of meal deliveries and food ordering. In addition, Swiggy is also looking into partnering with other delivery platforms to offer expanded food options for users.
According to the email, Swiggy plans to make difficult decisions about its business in order to save cash. This includes layoffs and reducing expenses. The company has long been considered one of the leading Indian app-based food delivery services, but it faces intense competition from rivals such as Zomato and UberEATS.
Majety’s admission that their startup over projected growth in food delivery creates challenges for their profitability goals highlights the importance of careful planning and prudent execution when starting a new business. Over hiring can be costly and can lead to problems if assumptions about future growth are not accurate. Firms that make such mistakes may face difficult choices, such as reducing staff or adjusting funding levels, but they ultimately benefit from making smarter decisions early on.
It is clear that the organization has a lot of room for improvement in terms of its pace of execution. One issue that has been identified is the increase in communication overhead as a result of the different orgs working iteratively. This has compromised agility, resulting in less being accomplished with what would have been available if these layers had not been created.
Fans of the startup were apparently not happy to hear this news especially since the meat marketplace was one of its main attractions. However, it is unclear if Majety plans to continue selling other goods on its website or if the shutdown is permanent.
It seems that Redvolution has decided that its Meat marketplace is not doing well, despite the hard work of its team. This announcement comes as a disappointment to many customers, who will have to find another way to get their meat. However, the company is still committed to its other new verticals and will continue developing them.
The Majety co-founder and CEO, Rohit Jain, announced that the company will be providing severance, accelerated vesting cliffs and medical insurance for its employees until May of this year in an email to employees on Friday. The impacted employees will be paid a severance of three to six months and additional days based on each year of service at the startup. Swiggy will also accelerate their vesting cliff and is providing medical insurance for them and their dependents until May this year.
The job cuts in the Indian startup ecosystem continue unabated, with reports indicating that more than 20,000 workers have lost their jobs since the market downturn started in late 2018. The layoffs have hit startups big and small, from well-known players such as Zomato and Ola to newer companies like Unacademy and Byju’s. Many of these firms are now struggling to find enough new employees to keep up with demand. The situation is especially dire in India’s technology hub Bengaluru, where some startups have even been forced to lay off entire teams due to lack of available talent. In fact, the unemployment rate for people in their twenties in Bangalore stands at almost 50 percent – a staggering figure when compared with the national average of around 25 percent. This high level of unemployment may ultimately prove to be a major deterrent for talented young Indians lookingto start their own businesses.
Since appointing a group of bankers to evaluate a potential $1 billion IPO, Swiggy has been waiting for the right market conditions to materialize. However, with over 70% of its operations in India and majority reliant on customer loyalty and word-of-mouth, there is little assurance that the market will react positively to such a large investment. Nevertheless, Swiggy remains firmly committed to pursuing an IPO at some point in the future – assuming the conditions are favorable.
True to his word, Krishnamurthy warned of a continuing funding winter for the startup ecosystem at last year’s Code Conference. Despite signs of stabilization in 2018, he believes that the industry will have to grapple with a lot of turmoil and volatility in the coming months as investors reassess their interests. This includes struggles to find new capital; frequent rounds of layoffs; and an influx of companies seeking Series A or B rounds despite sluggish growth rates.
Many startup founders will hit the market between April and June next year, during which time the ecosystem will undergo a major change. This change is likely to pressure many startups towards success or failure, and it will be interesting to see what happens as a result.
