Despite the influx of significant funding into India’s startup ecosystem, several startups grapple with operational sustainability. One such example is Udaan, a business-to-business (B2B) e-commerce company headquartered in Bengaluru. Udaan laid off 10% of its workforce, numbering between 100 to 120 individuals, merely days after securing a robust $340 million in a funding initiative on December 15.
Most of these Udaan employee layoffs targeted the go-to-market (GTM) team, which is responsible for managing seller relationships and other crucial functions. These workforce adjustments to redundancies arise from a strategic overhaul undertaken in September. This restructuring integrated Udaan’s ‘Essentials’ vertical, covering fast-moving consumer goods, staples, and pharmaceuticals, with its ‘Discretionary’ vertical, encompassing general merchandise, lifestyle, and electronics.
In response to queries about the layoffs, a Udaan representative acknowledged the staff reductions. This organizational shift was a part of strategic “interventions” aimed at forging a “profitable business.” The spokesperson emphasized that the company remains committed to supporting the affected employees, offering benefits like medical insurance and placement assistance.
Udaan, founded by ex-Flipkart leaders Vaibhav Gupta, Amod Malviya, and Sujeet Kumar, is strategically streamlining its operations to optimize its expenditure amidst a challenging liquidity environment. Concurrently, the company is recalibrating its strategic objectives with a heightened priority on achieving profitability. As part of this strategic pivot, both Malviya and Kumar have transitioned away from their day-to-day operational roles within the organization.
Building on this strategic recalibration, September marked a pivotal month for Udaan, witnessing the departure of its Chief Technology Officer, Gaurav Bhalotia. Following Bhalotia’s exit, the company’s technology division underwent a restructuring, with distinct ‘Product’ and ‘Engineering’ segments emerging. These structural adjustments underscore Udaan’s proactive approach to adapting to evolving market dynamics and aligning its internal capabilities with its strategic objectives.
The recent leadership and technological restructuring within Udaan is not surprising considering its financial health. Following the pandemic-driven surge, the company reached an impressive peak run rate of around $4 billion in gross merchandise value (GMV). However, as market dynamics shifted, Udaan appears to be undergoing a strategic realignment, now operating at an annualized GMV run rate between $1 to $1.5 billion.
Taking a closer look at Trustroot Internet’s financial performance, the Singapore-based parent company of Udaan, there’s a notable YoY adjustment. The firm reported a 43% YoY decline in gross revenue, amounting to Rs 5,629 crore in FY23. However, Trustroot Internet managed to narrow its losses to Rs 2,075 crore in FY23, showing a marked improvement from the Rs 3,123 crore loss recorded in the preceding fiscal year, FY22.
Layoffs at Indian Startups 2023
The broader Indian startup ecosystem in 2023 seems to be navigating challenges, with more than 28,000 employees laid off in the first three quarters. The fourth quarter is expected to meet the same fate. Faced with the dual challenges of funding uncertainties and market volatility, startups are adopting aggressive restructuring measures. The primary aim behind these actions is to safeguard cash reserves and channel resources towards their core operational areas.
This year’s downturn starkly contrasts the highs of aggressive hiring witnessed in 2021, as per data by Longhouse Consulting. As a result, the number of laid-off employees increased from just 4,080 in 2021 to more than 20,000 in 2022. The number is expected to surpass 35,000 by the end of 2023.
Certain sectors like edtech, real money gaming, and B2B e-commerce were particularly hard hit. In contrast, fintech and deep tech sectors managed to navigate these challenges more effectively, as per insights shared by senior hiring executives with ET.
