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Bangalore-based Mohalla Tech Pvt Ltd owns ShareChat, and its short video app Moj is expected to lay off around 500 people. Moj had made a substantial userbase after TikTok was banned in India but faced stiff competition from Instagram and YouTube. ShareChat is valued at $5 billion and has more than 2,200 employees. Of these 2,200 people, about 500 will be terminated soon.
The layoffs come as investors pressure tech businesses and startups to curtail expenses due to high valuations in an unstable stock market. Tech giants like Google and Temasek backed ShareChat. The decision to lay off comes as the company “needs to prepare itself to sustain several external macro factors that impact the cost and availability of capital.”
“We’ve had to take some of the most difficult and painful decisions in our history as a company and had to let go of around 20 percent of our incredibly talented employees who have been with us in this startup journey,” a company spokesperson said today, adding that “as capital becomes expensive, companies need to prioritize their bets and invest in the highest-impact projects only.”
This is the second round of layoffs for Mohalla Tech after its closure of the online fantasy game platform Jeet11 in December 2022, which resulted in about 100 people being let go. The business said that over the past six months, it has aggressively optimized expenses and stepped up monetization initiatives.
“The decision to reduce team member costs was taken after much deliberation and in light of the growing market consensus that investment sentiments will remain very cautious throughout this year,” the spokesperson said.
The severance payout from Mohalla Tech will include the entire salary for the notice period, two weeks’ compensation for each year of employment, full variable pay until December 2022, and continued health insurance through June 2023.
Furthermore, terminated employees will be allowed to retain work assets like laptops, and Employee Stock Option Plans, or ESOPs, will continue to vest as scheduled till April 30, 2023, which employees can.
The ShareChat app significantly contributes to Mohalla Tech’s earnings through adverts, which rose 30 percent yearly in FY22. The entire expenditures for Mohalla Tech increased by around 119 percent to 3,407.5 crores from 1,557.5 crores in the fiscal year 2021. All of this was brought on by rising costs from marketing, staff benefits, and IT costs.
