It has revoked the joining of 67 fresh hires from top engineering and management institutes.
The Tiger Global-backed company with a strength of 1,100 employees says the layoffs would affect all teams. The fresh recruits were expected to join the company starting July.
“We have revoked 67 offers in total. We are making some strategic changes in the company. We are downsizing because of the market environment and revised growth projections. So, these changes have been made and we are no longer able to give the offers we had made,” said Prashanth Verma, assistant vice-president, marketing at Grofers.
Employees affected by the layoffs will be offered severance packages equivalent to double the salary they would draw during their notice period
Grofers’ decision comes after Flipkart’s move to defer joining dates of leading engineering and management institutes by six months. It stated that it was rejigging its team structure which would make it hard to accommodate freshers immediately.
After facing flak from the Indian Institutes of Management and Engineering, employees at Flipkart who were the alumni of these institutes, arranged for six-month internships at other startups with a stipend of Rs 50,000. The students would have the option of continuing at the startups after the six month period or joining Flipkart in December.
“In the past couple of months, we have been making some necessary strategic changes within the company. The changes we have made will, in our opinion, benefit our customers in the long term. However, these changes have made the new roles redundant and therefore, we are no longer able to continue with the offers we made a few months back,” wrote co-founders Saurabh Kumar and Albinder Dhindsa, in a blog post.
In the face of a funding crunch, several other startups, especially in the Food-Tech space, have gone through a round of layoffs and downsizing operations in the recent past.
Zomato and FoodPanda both went in for a round of layoffs, while SponJoy, a company which was acquired by Grofers, shut its services in major cities. TinyOwl, another struggling food ordering company was acquired by B2B delivery startup Roadrunnr (now Runnr).
Experts have questioned the business models of hyperlocal delivery services such as Grofers and their food-delivery counterparts. These companies are said to be burning millions of dollars in customer acquisition and have struggled to retain delivery staff. Attrition in the sector is said to be as high as 80 per cent.
India’s largest taxi aggregator Ola had also experimented with grocery and food delivery to keep drivers engaged between rides. The company subsequently shut its Ola Cafe and Ola Store offerings.