From HomeLane to Instamojo, startups go for pay cuts over layoffs

Bengaluru: The affect of Covid-19 might have left many of the startup ecosystem reeling with a pointy dip in revenues, however some founders stay optimistic that employees is not going to have to be let go thanks to cost-cutting measures and pay cuts throughout the board.
A number of small and mid-sized startups in residence design, fintech, and e-commerce that ET spoke to didn’t anticipate job cuts whilst a few of them stated they had been lowering spend on advertising and marketing, placing workers on paid furlough, and giving out decrease increments. Leaders throughout HomeLane, Droom, Cashfree, Instamojo, and MoneyTap – which have all had their enterprise impacted due to the pandemic – are engaged on growing their runways in order that they’ll hold going with out resorting to pink slips.

At on-line market Droom, revenues have come to a grinding halt from Rs. 205 crore within the final two weeks or so with nobody putting orders thanks to the lockdown. The startup averages about Rs. 650-700 crore in income each month, founder Sandeep Aggarwal informed ET.

“We have announced 15% salary cuts for employees across levels, and 50-odd people have been put on furlough with financial assistance. They have not been laid off – continuing to get part of their salary and medical insurance – and remain on our rolls till our revenues pick up and they can come back full-time,” Aggarwal stated, including that he might be taking zero wage until issues stabilise.

These measures have doubled the corporate’s present runway to two years.

Similarly, at residence design startup HomeLane, revenues have come down to single digit proportion as of February, says co-founder Srikanth Iyer, prompted due to incapability to implement initiatives.

“Increments will be considered for only 70% of the workforce and senior leaders are taking a pay cut of upto 50%,” Iyer stated. Employees is not going to be laid off no less than for the time being, he assured.

At fintech agency Instamojo, income has fallen by 20% within the final couple of weeks, and the variety of clients has decreased by a 3rd.

“We are seeing some recovery although it’s still early days, but right now, the focus is on continuing our journey because thousands of small businesses rely on us,” stated Sampad Swain, co-founder. Top administration has taken a 40% pay reduce, there’s a 10% pay reduce for these at decrease salaries, and nearly a 3rd of the workforce will see no affect of their payouts. Swain stays hopeful that pink slips is not going to be obligatory.

However, not all startups will reduce workers’ pay.

At client credit score startup MoneyTap, co-founder Bala Parthasarathy stays bullish on development.

“Consumers will see a stronger need for credit and lending after the lockdown, so our employees need not worry,” he stated. The firm has created a pool of funds to give interest-free-loans to workers impacted by Covid-19.

At fee gateway firm Cashfree, transactions have gone down by nearly 20-30% with some sectors like journey faring worse than others, stated co-founder Reeju Datta.

“We are seeing a lower payment volume but it’s not alarming for us as we are profitable, and thus able to absorb this revenue dip,” Datta informed ET. The firm stays optimistic about development and expects to add 100 folks to its headcount by this December. No wage cuts are anticipated, Datta stated.

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