Investors wary of high valuations in an uncertain stock market continue to push technology companies to cut costs as the market continues to witness rising inflation and concerns about the Maceo economy. In his latest episode on tech layoffs, his social media platform ShareChat today became the latest example of scaling back in anticipation of an impending recession. The company, which is backed by tech giants such as Google and Temasek, has to prepare the company to sustain “several external macro factors that affect costs and capital availability,” so employees has announced it will lay off 20% of him.
ShareChat and its short-video app Moj, owned by Bangalore-based Mohalla Tech Pvt Ltd., are expected to lay off around 500 people. ShareChat is valued at $5 billion and has over 2,200 employees.
A company spokesperson said today, “We have had to make some of the most difficult and painful decisions in our history as a company, and we are very proud of the incredible talent who has been with us at this start. We had to let go of about 20% of our workforce.As capital becomes more expensive, companies must prioritize their bets and invest only in the most impactful projects.”
The momentous decision replaces Mohalla Tech’s December 2022 shutdown of online fantasy gaming platform Jeet11, which laid off nearly 100 employees.
The company said it deliberately optimized costs across the board over the past six months and accelerated its monetization efforts.
“The decision to cut labor costs was made after much deliberation and in light of the growing market consensus that investment sentiment remains very cautious throughout the year,” the spokesperson said. .
It has doubled its advertising and live-streaming revenues and aims to weather “economic uncertainty” and come out stronger in the next two years.
Company retirement package includes total salary for the notice period, two weeks’ salary for each year of employment with the company, full variable pay until December 2022, and health insurance valid until June 2023 .
The ShareChat app has been a major contributor to Mohalla Tech’s revenue through advertising, growing 30% YoY in FY22. Mohalla Tech’s total expenses increased by almost 119% from SEK 1,557.5 to SEK 3,407.5 in the 2021 financial year. This is all due to increased marketing, employee benefits, and IT expenses.
Mohalla Tech’s loss further widened to Rs.298.86 billion from Rs.249.86 billion due to ‘non-operating expenses’.