Online payment platform-majors Paytm and Mobikwik have come to the rescue of the employees laid off recently by Snapdeal after the online e-commerce giant confirmed that it had faced mounting losses and needed to rethink their business model. An estimated 600 employees have already been retrenched in the process of business restructuring and many more are said to be facing the axe as well. It is in this context that the decision by Paytm to play the Good Samaritan has gained it much public support.
As it is, the startups in India are already facing a lot of challenges in order to stay afloat, with relevance being on the back of their minds. The mothballing of Stayzilla has also seen a number of trained employees being handed pink slips. Paytm, which is backed by the Chinese major Alibaba, sees this as a potential to attract more employees with paychecks which may be substantially lower as well. In retrospect, this is a win-win situation for Paytm. Founder Vijay Shekhar Sharma tweeted the same on Friday morning adding that both Paytm and Paytm Malls were welcoming terminated employees with’ open arms.’ Interestingly, Sharma did not mention any specific company in his tweet when he spoke of business restructuring. He clearly meant Snapdeal and Stayzilla. Both of these companies are located majorly in the National Capital Region and both have seen losses very recently as well.
— Vijay Shekhar (@vijayshekhar) February 24, 2017
Troubled Days For Indian Startups
Snapdeal, which is backed by Softbank had earlier announced that it would lay off the employees in an effort to ‘right-size.’ Three major arms, including e-commerce platform Snapdeal, online mobile wallet and payment platform FreeCharge, and the logistics wing Vulcan Logistics have laid off these employees. Snapdeal co-founder Kunal Bahl, together with the other co-founder Rohit Bansal admitted to ‘business mistakes’ and said they would be taking a 100% pay cut. Reports also suggest that Snapdeal plans to downsize by as much as 30 percent.
Stayzilla, which is an online hotel room aggregator based in Chennai, had to shut up due to exceedingly strong market pressure. Paytm had earlier benefitted greatly from the demonetisation move announced last November. In an expansion mode now, the marketplace app PaytmMall, which will see some of the retrenched employees taken aboard, is said to need at least at least 700-1000 new professionals, according to a report by Business Standard, which you can view here. Paytm is also planning to consolidate in the face of growing competition: it is said to be planning to invest Rs 600 crore in a move to expand a new QR code-based payments system.