B2B Ecommerce Unicorn Udaan Lays Off At Least 3,000 Contractual Employees

Udaan has offered one month’s gross salary and three months of group medical insurance as compensation

Bengaluru-based Business-to-Business (B2B) ecommerce unicorn Udaan has laid off an estimated 10%-15% of its contractual staff (approximately 3,000-3,500 contract-based employees), through emails sent by Udaan’s consulting firms on April 24.

According to several employees who took to Twitter to express their discontent, their contracts were terminated through a single email, without prior intimation or reason. The contractual workforce mostly included sales, delivery, and collection staff that acted as ‘fleet-on-street’ for Udaan.

Udaan has drawn considerable flak on social media for the way it terminated its contractual workers, who are now stranded far away from their hometowns without jobs amid the COVID-19 lockdown. According to several Twitter posts, some former Udaan employees have also lodged formal complaints against the Bengaluru-headquartered startup.

According to the contract termination letters examined by Jumpstart, the employees were offered one month gross salary as separation pay along with a 3-month extension of group medical insurance until July 2020.

In an email statement to Business Standard, Udaan said that all associates impacted by the layoff will be part of a priority hiring list where they will be given preference to join as soon as relevant vacancies open up in the company.

“We are also giving a recommendation letter and support wherever possible to find new employment opportunities through our partners,” the statement added.

So far, the company has not laid off any permanent employees.

“The market is bad across the board, from a business and a fundraising perspective. The aim (for Udaan) is capital conservation and recalibrating fundamentals,” said an investor in the company, adding that the drive to cut costs had been ongoing for a few months.

Udaan’s non-essential business, which accounts for two-thirds of the company’s revenue, has completely ceased amid the country-wide lockdown and restrictions on the sale of non-essentials. Udaan’s sales of essentials have suffered a 40% decline.

“We are adapting to the structural changes in demand in India which is impacting our current infrastructure … Driven by economies of doing business in a sustainable manner, we are compelled to restructuring our teams which has unfortunately made some roles redundant,” a company spokesperson told the Economic Times.

The decision to layoff contractual workers comes one month after Udaan raised US$30 million from its Singapore-based parent company Trustroot Internet in March. The startup, whose valuation is close to $3 billion, has received a total investment of approximately $900 million till date.

Founded in 2016 by three former Flipkart executives and officially named Hiveloop Technology, the loss-making startup recorded a revenue of $6 million against an annual expenditure of over $110 million in 2019.

The startup is one of India’s most highly-valued and highly-funded startups, with a roster of high-flying investors that include Tencent, Altimeter Capital, Digital Sky Technologies (DST Global), GGV Capital, Lightspeed Venture Partners and Hillhouse Capital Group.

The massive layoff comes despite the advisory issued by the Labour Ministry to all employers earlier this month, which advisory requested employers to refrain from layoffs and pay-cuts under the strain of COVID-19.

“In the backdrop of such a challenging situation all the employers of public/private establishments are advised to extend their coordination by not terminating their employees, particularly casual or contractual workers, from their jobs or reduce their wages,” the advisory stated.

However, according to media reports, Udaan is not the only Indian startup to cut jobs across the board, fearing that the lockdown might be extended beyond May 3. Food ordering and delivery platform Swiggy is reportedly planning to downsize the operation of its private brand kitchens, which is likely to impact approximately 900 employees.

According to data from Big.Jobs, Oyo, BharatPe, Acko, Fab Hotels, Droom, UpGrad, Meesho, Curefit, Zilingo, and Zomato are among the many startups that have laid off employees or implemented pay-cuts due to the impact of COVID-19 – Udaan is the latest of them to do so.

Header Image by Negative Space on Pexels

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