Startup Woes: Grofers To Cut 10% Staff, Withdraws Campus Job Offers

30/06/2016 10:06 AM IST | Updated 15/07/2016 8:27 AM IST
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GURGAON, INDIA - MAY 7: Aakash from Online Grocery Shopping portal Grofers going to deliver the consumables to the client on May 7, 2015 in Gurgaon, India. (Photo by Ramesh Pathania/Mint via Getty Images)

Online grocery delivery provider, Grofers, is retrenching about 10 per cent of its workforce and has reportedly withdrawn 67 job offers to campus graduates, becoming the latest startup to prune costs amid a tough market for fundraising.

In an e-mail to employees, Grofers Head Of Human Resources Rishi Arora, said that staff at its customer support and content team as well as human resources, will be among those most affected, Mint reported. Grofers, which is backed by private equity investors, Tiger Global Management and SoftBank has about 1,500-2,000 employees, according to Mint.

In a blog post, Grofers said the move was the result of “tough business decisions” and necessary strategic changes at the company and issued a “heartfelt apology” acknowledging the impact on campus hires and how it had handled the situation.

Grofers Co-founders Saurabh Kumar and Albinder Dhindsa wrote in the post, “Our communication yesterday has left a lot to be desired and we accept full responsibility for it. The ones affected by this decision deserved much more empathy and understanding – and the fact that we failed in that is unacceptable. We are really and truly sorry.”

Arora told Mint, “The primary driver of this decision is our changing growth trajectory. We grew at an insane pace last year but given that as of April this year, we have effectively reduced marketing spend next to nothing. We don’t foresee the same growth rates to continue.”

Faced with a tighter fundraising environment as well as pressures to become more profitable, several private equity-backed startups have announced plans to trim their workforce after growing too fast.

E-commerce services company Snapdeal; restaurant discovery platform Zomato and Cardekho, an online auto classifieds provider, CarDekho have retrenched several hundreds employees.

Last month, Flipkart delayed the joining dates for at least 17 graduates from the Indian Institute of Management (IIM), Ahmedabad. That led to some backlash from the campus placement cells of institutions such as the Indian Institutes of Technology (IITs), which has reportedly begun asking Indian startups to disclose their sources of funding and balance-sheet details ahead of campus recruitment.

Last year's private equity boom has tapered off dramatically in the first five months of this year, HuffPost reported earlier. According to data by VCCEdge, PE activity in terms of deal value in the first five months this year added up to $6.2 billion (Rs 414 billion), or about 36 percent less than during the same period last year.

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