India: Blue-collar workforce at startups takes a big hit as business volumes fall

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Several startups over the past few weeks have laid off their contractual workforce after business volumes were impacted, mostly due to logistics and operational restrictions placed by the lockdown due to covid-19.

The current covid-19 crisis has impacted close to 60% of the total contractual staff workforce in India, across segments of telecom, retail, real estate, electronics manufacturing, and hospitality, said experts. This has put major stress on India’s blue-collar economy which has been left without any employment.

Among startups, food tech unicorn Swiggy laid off nearly 500 people, mostly contractual cloud kitchen staff, and B2B commerce firm Udaan laid off over 2000 contractual workers on Friday among others. Others such as Meesho, Oyo, Bounce and VOGO have also furloughed or let go of their staff go, as business continues to be impacted. Due to a slowdown in business activity, pressure has mounted on staffing firms which receive revenues from firms for assisting and providing contractual staff.

“We should remember that if employers don’t survive, there are not going to be jobs after the lockdown. It is important to note that capital doesn’t pay salaries, but customers do (via sales revenues). Even without usual revenues, many companies have decided to pay the current month’s salaries, even for those contract workers who are getting laid off, considering rationalization,” said Rituparna Chakraborty, co-founder and executive vice-president, TeamLease, a human resource and staffing services provider.

Apart from decline in demand, startups with hyperlocal operations are seeing newer challenges around delivery and on-ground staff not being able to turn up to work since state borders continue to be closed; or firms not being able to procure enough necessary passes from the government.

“There is almost an 80% drop in demand for new contractual hires, since almost 8 out of 10 firms are not looking to hire for the next 3 months or more. But we see larger, well-funded startups and firms trying to do as much as they can by providing severance pay and medical insurance to the person laid off,” said Waqar Azmi, Founder & CEO, Sutra Services pvt. Ltd., a technology services company that provides hiring solutions to startups.

However, the impact of the current crisis is expected to not just affect contractual workers, but also employees on payrolls, who may not closely be involved in ground operations.

“It is not true that only contractual employees are most vulnerable to losing jobs, even employees on the permanent payrolls are also at risk of losing their jobs next.These include team-supervisors or managers who manage these contractual workers and are on the pay-rolls of the company. Layoffs will eventually hit not just contractual roles, but also these supervisors, then managers, and on-ground business heads,” adds Chakraborty.

Staffing industry executives said that while the impact on the blue-collar workforce will continue in the months to come, some geographies might spring back earlier than expected, and give relief to the blue-collared economy.

“We foresee states like Maharashtra, Gujarat, Madhya Pradesh, Delhi NCR and parts of Tamil Nadu being adversely affected by covid-19 and due to containment, staffing and business operations in these areas will be impacted for 2-3 months. However, South India and North East might open businesses sooner, within a month, which can be a big relief for the blue-collar workforce,” added Azmi.

Some startups such as online grocery delivery firms are crunched for on-ground workforce and are rapidly hiring from ancillary industries. Grofers has hired close to 2,500 people in recent weeks for its supply-chain operations, including warehousing, and plans to hire another 5,000 workmen in the coming weeks.

However, due to geographical challenges and restrictions in movement, contractual staffers are looking at solutions for better absorption of its laid-off staff. Companies such as TeamLease are extending the option of online skill upgradation as well as redeployment options to candidates in distress based on the available openings during the Covid lockdown scenario.

This article was first published on livemint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.