Cars24 Services Ltd has asked 600 employees to leave, a person familiar with the development said, even as the used cars platform pushes ahead with its international expansion plans. All of the employees asked to go were from India after the annual appraisals, the person said on condition of anonymity.
A second person aware of the details said following the staff cut, the Softbank and Alpha Wave Ventures backed company would move closer towards profitability.
Most of the staff asked to go were in junior positions, the first person cited above said. “It is not because of (lack of) funds, we are also expanding globally,” the person added. News website Inc42 first reported about the layoffs.
Cars24 was founded in 2015 to help consumers buy, sell and finance used cars.
Before this development, Cars24 had close to 9,000 employees.
The company raised $300 million in equity and an additional $100 million in December 2021, at a valuation of around $3.3 billion.
At the time, Cars24 said it would use the proceeds from the latest fund raise to fuel its international expansion, and ramp up its refurbishment labs, while also accelerating on growth to gain market share.
In 2021, the company entered international markets such as Australia, the UAE and Thailand, and had plans to expand its presence across 6-7 countries in 2022, it said at the time. It was also eyeing expansion in Saudi Arabia, as well as Indonesia and Malaysia in Southeast Asia.
Co-founder Gajendra Jangid said in an interview with Mint that international markets contributed to 20% of the company’s overall revenues, owing to higher ticket sizes. Jangid said the company’s annual recurring runrate stood at $1 billion in December 2021.
Cars24 reported consolidated net sales of ₹2754.9 crore in fiscal year 2020-21, down from ₹3,023.3 crore in net sales in fiscal 2019-20, which in turn was almost double its net sales in FY19, which stood at ₹1,654.61 crore.
Alongside, it has reduced its losses over the years.
The company reported a loss of ₹191.5 crore in FY21, down from ₹291.6 crore in FY20, which is marginally down from ₹325.6 crore in FY19.
The used-car platform joins multiple startups across sectors that have recently asked employees to go, potentially in a bid to conserve capital in a difficult funding environment.
“There are inflationary pressures currently, and given some of the uncertainty, there is a little bit of prudence at play with some of the organizations, not all. They probably have an internal messaging to be as lean as possible and focus on less cash burn,” said Rituparna Chakraborty, co-founder, and executive director at TeamLease Services, that provides staffing solutions to businesses including startups.
“However, startups were the ones to pay disruptive salaries. With all those perks came high risk,” Chakraborty added.
TeamLease mostly works with employees at the bottom of the pillar and at mid-levels, she said.
“Skilled work force have multiple job options and most of them get immediately hired or hired soon enough. There are still more specialized jobs than employees,” Chakraborty added.
On Wednesday, 424 Vedantu employees were laid off. In March and April, Unacademy, operated by Sorting Hat Technologies Pvt. Ltd, laid off nearly 800 employees.
Earlier this year, another edtech startup Lido Learning asked 1,200 of its employees to resign, saying that it was looking to wind down its operations amid a funding crunch.
Social commerce startup Meesho laid off 150 employees in May. In February, OkCredit, which is backed by marquee investors including Tiger Global and Lightspeed, laid off around 40 employees.