Indonesian e-commerce unicorn Bukalapak cuts 10% jobs to pare costs

Photo: Bukalapak

Indonesia e-commerce unicorn Bukalapak has confirmed reports that it has laid off 100s of employees and said that it is discontinuing a number of functions, as it looks to cut down costs.

In a statement, the company claims that the layoffs were part of an efficiency drive, which will see it cut about 10 per cent of around 2,500 employees.

A report, citing sources, said several divisions such as engineer, marketing, and customer service were ‘victims’ of the job cut exercise that the company has adhered to, while TechInAsia said the company is discontinuing its smart retail and internet-of-things divisions.

According to our sources, ousted employees were given a single-day notice but were paid financial compensation.

The layoffs, which came as a surprise to many, sparked a buzz on social media with many linking it with the pressure in the heated e-commerce space amid stiff competition from fellow heavily-funded unicorns like Tokopedia, Lazada, and Shopee.

Indonesian IT Minister Rudiantara, however, played down the development as something “normal” and said he hoped the employees let go by Bukalapak would go on to find or join new startups.

Responding to the reports, Bukalapak Chief Strategy Officer (CSO) Teddy Oetomo said in a statement: “Bukalapak aims to be sustainable e-commerce that continues to grow and create an impact for many years to come. Therefore, we need to align internally to execute our long-term business strategy, make the necessary changes, and deciding on a path to follow.”

Interestingly, the layoffs come barely months after Bukalapak beefed up its top management team by hiring several executives to fill in positions that were left vacant due to recent departures at the senior level.

The company claimed the appointment of the new executives was also part of its efforts to accelerate its journey towards profitability.

Oetomo said the employee restructuring moves, including the appointment of the new management team, have been spurred by “the need to hire talents with larger capabilities.” This comes as the e-commerce giant embarks on “the next stage in our journey to achieve company targets.” For now, he said, the target for Bukalapak includes breaking even and becoming sustainable.

Among the new faces that have been inducted into the company over the last few months are former BBM CTO Mohan Krishnan, who comes in as Bukalapak’s new SVP of Technology, former Amazon senior software development manager Mohammad Alabsi as VP of Engineering, and former Commonwealth Bank Indonesia Chief of HR Bagus Harimawan as chief of talent.

The latest new VP hired is former Adidas global brand communications lead Erick Wicaksono, who now leads Bukalapak’s marketing team.

The new key hires have taken over from VP predecessors who have opted to part ways with Bukalapak in favour of new challenges elsewhere. Among those that have left are some of the company’s earliest employees such as VP (Marketing) Bayu Sherli Rachmat, who is now a co-founder at proptech startup Mamikos, and VP (Talent) Gema Buana, who now assumes a similar position at travel startup Tiket.

Another VP-level executive known to have left Bukalapak earlier this year is former associate VP of Content Budi Putra, who is now the country manager of social media influencer network Collab Asia.

Following the hiring of the new executives, Bukalapak has undergone notable changes this year, according to some current and former employees. Among them is a change in the company’s work culture, which is said to be more efficiency-driven, large corporate-like culture.

Commenting on this, Oetomo said such a matter is difficult to measure due to its subjective nature. However, he explained that the company believes it maintains a comparatively flexible culture, but “remains focused on ensuring optimal efficiency be delivered by our talents”.

Other layoffs announced by companies recently include Zomato in India (540 employees) and Uber in the US.

Bukalapak, which passed the $1-billion valuation mark in 2017, last raised an investment of $50 million from the Mirae Asset-Naver Asia Growth Fund at the start of this year.

The company is backed by Singapore’s sovereign wealth fund GIC Pte and China’s Ant Financial, the Alibaba affiliate controlled by billionaire Jack Ma. However, its majority shareholder remains Indonesian listed broadcaster Emtek.

The local conglomerate is reportedly in talks with ride-hailing giant Grab to divest its stake in digital payment platform DANA, which is also backed by Ant Financial.