ShareChat fires 20% of staff in fresh layoffs, CEO says company ‘overestimated the market’

ET first reported about the impending layoffs at ShareChat in its January 16 edition.

“We are taking a very difficult decision today to part ways with around 20% of our talented FTEs (full-time employees) to ensure the financial health and longevity of our company in the current uncertain macroeconomic environment,” Sachdeva’s note to staff said. ET has seen a copy of it.

Explaining the rationale behind the fresh job cuts, he said, “In hindsight, we overestimated the market growth in the highs of 2021 and underestimated the duration and intensity of the global liquidity squeeze.”

The company has deactivated Slack and email access for its impacted staff while the employees still at the firm were were informed of the development through its internal Slack channel.

“I realize that this sudden revoking of access is not the ideal experience. We debated a lot about it but this was the only practical solution. We trust that all of you have ShareChat’s best interest in mind but this step had to be taken to ensure the security of sensitive company information as well as the personal data of our customers,” ShareChat’s Sachdeva, who started the firm with Farid Ahsan and Bhanu Pratap Singh in 2015, told employees.

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Company explanation Sachdeva said that he had shared–in recent town halls– about the changing market dynamics impacting MohallaTech.

“We were one of the first startups in India to take proactive measures by sharply reducing our costs across user-acquisition, marketing and server spends, while raising an additional round of funding, anticipating a challenging business environment, he said on some of the steps taken by the firm to rein in costs. “We also put in a guardrail of flat headcount in May, and with your support executed on our AOP with much lesser than planned bandwidth.”

According to Sachdeva, this was ‘clearly not enough’.

“There is a growing market consensus that the current global economic downturn would be a much more sustained one, and we thus have to, unfortunately, seek more cost savings by reducing our team size,” he added in his note to staff on Monday morning.

Employee package

For the affected employees at ShareChat’s parent firm, the company is provided a financial package that includes a payout for the notice period and an additional 15 days of monthly gross salary for each completed year of service as a full-time employee.

The internal note showed that a performance bonus will be paid 100% pro-rated till December 31, 2022 along with any amounts that have accrued but remain unpaid as of the last working day.

Health insurance benefits will continue to remain active till June 30, 2023 and laptops and smartphones provided by the company during the tenure of the employment can be retained by the employee for their personal use, Sachdeva added in his note.

For employees who have to leave the firm as part of the job cuts, their Esops that vest on or before April 30, 2023 will be retained by those staffers.

In the next few hours, the HR team is expected to reach out to employees on their personal mail IDs with further details, people in the know of the matter said.

“I am saddened and apologetic that we could not take adequate measures in time to ensure the continuity of all our people in this journey,” Sachdeva added in his note to staff.

The Times group, which publishes The Economic Times, is an investor in ShareChat, since it sold MX Takatak, a short video platform to MohallaTech in 2022.

(Illustration and GFX by Rahul Awasthi)