Shopee reportedly conducted three rounds of layoffs this 12 months as its parent Sea Limited struggles towards profitability.
Lauryn Ishak | Bloomberg | Getty Images
More tech startups in Southeast Asia laid off staff this 12 months, as macro headwinds widened losses and enterprise capitalists pushed startups to increase their runways.
Last week, online marketplace Carousell announced it was letting go of about 10% of its headcount — or roughly 110 positions.
In November, Indonesia’s GoTo Group — a merger between ride-hailing giant Gojek and e-commerce marketplace Tokopedia — cut 1,300 jobs or about 12% of its headcount.
Each firms cited difficult macroeconomic challenges.
There are signs that we’re stepping into a recession, if we are usually not already in a single. Due to this fact, customer demand is more likely to be slower in 2023.
They join Sea Group and other firms within the region in downsizing headcount. Sea Group, based on local media, laid off greater than 7,000 employees over the past six months.
“Founders are being prudent by managing costs on this environment to make sure there’s sufficient runway till late 2024,” Jia Jih Chai, co-founder and CEO of Singapore-based e-commerce brand aggregator Rainforest, told CNBC. Chai was previously a senior vp at Carousell and a managing director at Airbnb.
“There are signs that we’re stepping into a recession, if we are usually not already in a single. Due to this fact, customer demand is more likely to be slower in 2023,” said Chai.
In a note to Carousell’s employees, CEO Quek Siu Rui acknowledged “critical mistakes” were made. He said he was “too optimistic” in regards to the Covid recovery and underestimated the impact of growing his team too quickly.
“The truth is that we were quick to grow our expenses and hire, however the returns took longer than expected,” said Quek, adding that there have been cost-cutting measures prior to now few months and Carousell’s leadership will take voluntary pay cuts.
More sustainable growth
Quek also said it’s only prudent that the corporate get to profitability as a gaggle as quickly as possible, because it is unclear if market conditions will improve.
Carousell posted a slower revenue growth of 21% in 2021 at $49.5 million, in comparison with a tripling of its revenue in 2020. Meanwhile, GoTo saw its losses swell from the January to September period.
“I used to be astonished that firms predicted that the Covid behavior changes would last without end,” Alex Kantrowitz, a Silicon Valley journalist, who also runs an independent newsletter and podcast called Big Technology, told CNBC’s “TechCheck” Monday.
“Clearly, once you’re allowed to exit to restaurants, hang around with friends outside, your usage of Netflix, Facebook, Shopify and Amazon would go down. So why do all of them construct as if that may last without end?”
“Previously, the businesses were designed for fast growth. So there must be changes made when the organization is shifting from strong growth to sustainable growth. For instance, chances are you’ll not need too many marketing people if the marketing budget is cut,” said Jefrey Joe, co-founder and managing partner at Indonesia-based Alpha JWC Ventures.
Tech startups in Southeast Asia are still largely unprofitable, with names like Sea Group and Grab amassing billions of losses annually.
Existing investors in the corporate are also actively advising founders to arrange for winter, Jussi Salovaara, Antler’s co-founder and managing partner for Asia, told CNBC. Enterprise capitalists are pushing founders to have an extended runway, he said.
Southeast Asia tech layoffs in 2022
| Startup | Employees affected |
|---|---|
| Glints | 18% of total headcount |
| Sea Group | 7,000+ |
| GoTo Group | 1,300 |
| Zenius | 200+ |
| Carousell | 110 |
| Foodpanda | 60 |
| Carsome | Lower than 10% of total headcount |
| iPrice Group | 50 |
| StashAway | 31 |
| *this list isn’t exhaustive |
Source: CNBC research
“We are saying to the founders that they should be prepared that next 12 months isn’t going to be easier than this 12 months,” said Joe.
“These firms could also be doing well operatively. They still have some growth. They may be near profitability, but they should ensure that they are sustainable for the longer term,” added Salovaara.
Tech firms are only seeing the start of layoffs, said Kantrowitz.
Globally, tech firms have been conducting mass layoffs, especially the U.S. tech giants. For instance, Meta cut about 11,000 jobs while Microsoft reportedly laid off lower than 1,000 people as a consequence of a slowdown in growth.
