E-commerce platform Meesho has laid off 15% of its workforce, which translates into 251 job cuts, as the homegrown startup tries to cut costs in order to boost profitability. The latest churn at Meesho is seen in the backdrop of its aim to achieve zero cash burn in the year 2023.
This is Meesho's second round of layoffs in about a year. Before this, the company had cut its workforce by 150.
The Bengaluru-based startup in a statement said it's laying off "15% of the employees base” as the company looks forward to working with a "leaner organisational structure to achieve sustained profitability".
Meesho said all those impacted will have the company's full support and will be provided a separation package that includes a one-time severance payment of 2.5 to 9 months (depending on tenor and designation), continued insurance benefits, job placement support, and accelerated vesting of ESOPs. "We remain grateful for their contributions in building Meesho,” the statement added.
Meesho co-founder and CEO Vidit Aatrey, in a letter to employees, said the company grew by 10X from 2020 to 2022 on the back of Covid tailwinds and aggressive investments. However, the macro climate has undeniably changed.
"As a result, we have had to accelerate our timeline to profitability as part of Project Redbull, while readjusting our GMV growth goals to 30% YoY."
He said while the cash reserves buffer it well for the "harsh circumstances", the company will stay "highly prudent".
He said the decision around who is impacted has nothing to do with performance, and only to do with business reality. "That we are losing the best, hard-working talent as a result of this decision is not lost on me," he added.
He also said that as leaders, "we made judgment errors" in over-hiring ahead of the curve. "At the same time, we could have run our org structure in a more effective and lean manner overall. Our spans and layers were inflated, and this could have unintended consequences on our speed to execute."
Layoffs at Meesho come in the backdrop of massive churning across the tech sector globally, with big as well as smaller companies resorting to shedding their workforces. The startup industry, especially, is facing the heat amid dwindling funding in the past year.
Earlier this month, Twitter Inc rival Koo laid off 30% of its employees, given the current market environment and external realities of a global slowdown. Estimates show that over 25,000 employees have been laid off across 90 startups in India since 2022, with the ed-tech sector being affected the most. This year alone, around 6,000 employees have lost jobs as Indian startups resort to mass layoffs amid a funding crunch, high costs, and low profitability. Meesho's FY22 losses stood at ₹3,247 crore but its revenue had surged 4.5-fold to ₹3,232 crore.