After the bubble, job cuts arrive at e-commerce companies

They hired, then they fired, some even shut shops.

After a rush to get funding and increase headcounts, a number of startups have been firing employees in the past few months. More than a thousand workers have lost their jobs in the layoffs.

Seven to eight months ago, rating and food-ordering firms Zomato and TinyOwl have asked about 550 people to leave. Rival Foodpanda laid off more than 300 employees. E-grocer Localbanya has temporarily (according to its website) suspended operations, and asked 40 people to quit. Last year, real-estate platform Housing.com reduced its headcount by 800 people.

The latest addition to the list is Snapdeal, India’s second-largest ecommerce firm. The company has put 200 employees in the contact-centre business on performance improvement programme (PIP). “Many team members have opted for this opportunity to improve requisite skills set, some team members have desired not to undertake the PIP and have instead decided to move on voluntarily,” a Snapdeal spokesperson said.

But there’s a background to the story.

In March 2013, Snapdeal had 1,300 employees. It was to double its headcount in the next couple of years, but in anticipation of growth, it employee strength went up to 8,000. This was a result of mass hiring — for example, 250 management trainees and 300 engineers were hired in one year. A former employee of Snapdeal said many of these people don’t have enough work to do. But, “Snapdeal doesn’t have a pink-slip policy. This move is to rationalise headcount,” the employee said.

Market watchers said this was waiting to happen for a long time. Showcasing hiring is an indicator of size, but as businesses mature, venture capital firms look at profitability. “Companies are focusing on performance and bottomline,” said Rituparna Chakraborty, co-founder and senior vice-president at staffing firm TeamLease.

TinyOwl is looking at more job cuts, and has asked some of its employees in Mumbai to leave. In Delhi, it has shut down its Gurgaon office. Zomato founder Deepinder Goyal had told HT earlier: “There was no downsizing in the sales team, but 300 people in the content team who worked on listing were asked to leave.”

Some part of the job cuts, Chakraborty said, is because more roles would be outsourced, including IT, logistics and packaging.

Snapdeal has already started outsourcing. “We have a healthy mix of in-house and outsourced facilities across functions,” the spokesperson said.