Ratan Tata-backed CarDekho has joined the list of unicorn start-ups like Vedantu, which have fired several employees in 2022 to survive the ongoing funding winter.
While this is the first round of firing at CarDekho in 2022, the 100 employees made redundant by Vedantu are an addition to the 624 employees that the edtech unicorn laid off in May. According to a source in the know, the latest firing at Vedantu is from the company’s sales enablement team (recruiting and training), as a result of business restructuring.
At CarDekho, employees across junior and mid-senior levels have been fired as the used-car marketplace turned its focus to profitability, according to three sources, who spoke to BusinessLine on condition of anonymity. While the number of impacted employees at CarDekho could not be verified, the majority of the impact is on roles like retail associates and inspection engineers.
Performance-based firing
“These are some roles which have become redundant, hence the performance-based firing. The company’s goal is now to make leaner teams and achieve a profitable P&L,” said one of the sources mentioned above. Adding to this, the second person said that CarDekho is citing performance as the reason for letting go employees but is not open to any discussion with the employees.
Further, an impacted employee from the retail team of CarDekho said that even though he has 8 years of experience in the industry, it is proving to be a struggle for him to land a job because he has been honest about being laid off. The CarDekho employees are fired under PIP (performance improvement programme) and hence have to serve a one-month notice period during which they are allowed to take garden leave.
At the time of press, Vedantu did not respond to queries.
"Our appraisal cycle ended in June 2022 and as a standard process based on the performance, few employees were kept under performance improvement plan. After providing adequate time to improvise under performance improvement plan and a post reassessment of performance, action has been taken as per the company policy," said CarDekho spokesperson.
Earlier in May 2020 too, CarDekho had laid off 200 employees after the Covid outbreak impacted the automobile sector. According to the company’s LinkedIn page, CarDekho has anywhere between 1,001 and 5,000 employees. The Jaipur-based company joined the unicorn club in October 2021 after raising a $250-million round of funding, which included $200 million in Series E equity and $50 million in debt. CarDekho was valued at $1.2 billion in this pre-IPO round.
At the time of fundraising, CarDekho said that it buys pre-owned cars from customers in more than 100 markets and has 3,000-plus cars available for online purchase. Another used-car marketplace, Cars24, fired 600 employees across departments in May 2022, citing performance issues. Ola also shut down its used-car business, Ola Cars, in June 2022, impacting hundreds of employees.
Funding slowdown
According to PwC India Report-Startup Deals Tracker, the total funding in the Indian start-up ecosystem fell by 40 per cent during Q2 CY22 to reach $6.8 billion. The analysts at PwC attributed the dip to a global slowdown, decrease in tech stock valuations, inflation and geopolitical instability.
This funding slowdown has resulted in start-ups rationalising costs, laying off employees, and increasing their focus on profitability. According to Inc42’s layoff tracker, over 11,000 employees have been laid off by Indian start-ups in 2022.