“Some Of The Most Painful Decisions”: ShareChat Lays Off 20% Employees
The social media site ShareChat today became the latest to shrink in anticipation of an imminent recession as investors, concerned of high valuations in a volatile stock market, continue to urge digital businesses to slash costs. The organisation, which has the support of digital behemoths like Google and Temasek, declared it will lay off 20% of its workforce in order to be ready to withstand “many external macro factors that effect the cost and availability of financing.”
ShareChat and its short video app Moj, owned by Bangalore-based Mohalla Tech Pvt Ltd., are anticipated to let go of 500 employees. ShareChat has more than 2,200 workers and a $5 billion market cap.
“We’ve had to take some of the most difficult and painful decisions in our history as a company and had to let go of around 20% of our incredibly talented employees who have been with us in this start-up journey,” a company spokesperson said today, adding that “as capital becomes expensive, companies need to prioritise their bets and invest in the highest-impact projects only”.
This significant choice was made in light of Mohalla Tech’s closure of the online fantasy gaming platform Jeet11 in December 2022, which resulted in the layoffs of close to 100 people.
The business claimed that over the past six months, it has aggressively optimised expenses across the board and stepped up monetisation initiatives.
“The decision to reduce employee costs was taken after much deliberation and in light of the growing market consensus that investment sentiments will remain very cautious throughout this year,” the spokesperson said.
It claimed to be increasing its reliance on advertising and live-streaming revenue with the intention of surviving the “uncertain economic conditions” during the following two years and emerging stronger.
The complete income for the notice period, two weeks of pay for each year of employment, full variable pay until December 2022, and continued health insurance coverage through June 2023 are all included in the company’s severance package.
Employee stock option plans (ESOPs) will continue to vest as scheduled until April 30, 2023 — which employees will retain — and unused leave balance of up to 45 days will be encashed as per current wage. Employees will also be permitted to keep work property like their computers.
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