The worst of the layoffs at Indian startups may be over, but companies are taking various measures to cut employee costs, resulting in either voluntary attrition or “silent layoffs.” This is happening due to the ongoing funding crisis and a strong focus on achieving profitability, according to industry insiders.
Some measures being adopted by companies to facilitate the transition include putting more employees on performance improvement plans, setting unrealistic targets within a short period, freezing hikes and variable pay, extending office hours, and mandating work from the office.
“If a company fires people en masse, it gets perceived in a negative light. Silent layoffs can show that the exits are performance-driven, even if sometimes there is too much unfair pressure,” said Aditya Narayan Mishra, chief executive of Ciel HR Services.
Companies are also identifying individuals who were hired with high salaries and perks during the 2021-2022 hiring boom but are not performing well.
“The pressure is on below-average performers as well as on average performers who were hired with very high salaries,” said Mishra. “Their output quality is under stricter scrutiny, and many who are found to be average are given 35-40 days to improve or leave. In ordinary situations, this would have been more of a gentle push to improve,” added Mishra.
Anuj Roy, managing partner at executive search firm Fidius Advisory, stated that “the most common tactic companies are using to facilitate the transition is to give zero hikes, little or no variable payouts, or no incremental grants in Esops (employee stock option plans).”
Managers are also facing increased scrutiny, with key performance indicators being closely monitored, according to Anshuman Das, CEO of Longhouse Consulting. “In many cases, managers’ workload is being doubled, leading to higher burnout and voluntary exits,” Das said.
“There is a strong focus on reaching profitability by 2024, and startups have no choice but to adopt cost-cutting measures,” said Amit Nawka, partner at PwC, specializing in deals and startups.
