B-schools brave tough times as fund crunched startups defer & withdraw job offers
Stayzilla and Grofers have recently joined the list of start-ups that have deferred and withdrawn job offers given to fresh recruits
Published - 13-July-2016
The latest startup to join the list of companies that have withdrawn job offers given to fresh recruits from premiere B-school students is Stayzilla. Last month, Grofers withdrew 67 job offers and also retrenched 10% of its workforce. Reportedly, Snapdeal, Zomato and CarDekho have retrenched several hundred employees in the last few months.
The scenario is getting worse day-by-day- as startups fail to get fresh rounds of investments. So after facing tough fundraising environment, as well as pressure to become more profitable, several private equity-backed start-ups have announced plans to trim their workforce after growing too fast. However, this entire thing came into the limelight after Flipkart deferred joining dates for campus hires from IIM Ahmedabad and IITs citing restructuring of its businesses. The strongly worded email from the chairperson of IIM-A to the Flipkart CEO, Binny Bansal was widely talked about, and post that, there has been enough media coverage on the entire issue.
Here is a list of few startups that have withdrawn or deferred the joining of new recruits:
A month back, Stayzilla delayed the joining date of 39 students it had hired from Indian School of Business in Hyderabad to July-August, from April-May. Along with this, it had also lowered their annual compensation package. According to recent reports, the latest from the company is that it has revoked offers made to nine students at IIT Kharagpur. No proper reason has been cited by the company, except for the fact that there is reorganisation happening.
The company has recently raised over $13 million in a Series C round of funding from existing investors Matrix Partners and Nexus Ventures, according to documents filed with the Registrar of Companies.
Towards the end of last month, online grocery delivery provider, Grofers, retrenched about 10% of its workforce and has reportedly withdrawn 67 job offers to campus graduates. In a blog post, the co-founders of the company apologised for the entire scenario. Citing changes in market conditions, which have affected their businesses, Grofers informed the students that the positions are not available.
Below is an excerpt of the blog post:
Ola is finding it difficult to absorb students whom they have hired and therefore, they have also delaying their joining offers.
Bengaluru-based logistics startup Roadrunnr too has delayed joining offers. The company had communicated to the students that it had deferred their joining till December. The startup has however, agreed to reduce the period of deferment from December to September. Recently, the company merged with TinyOwl, the food-tech startup and is now called Runnr.
InMobi has deferred the joining date of its new hires from July to November 2016. The company has promised that they will be giving job offers to the candidates and it will not be withdrawn. However, as per recent reports, the recruits had asked the company to reduce their period of deferment, but officials have expressed their inability.
Matrix Partners-backed mobile marketplace for home décor and interior designing products, Zimply, has shut its operations. The company was one of the startups that was blacklisted by IIT after they withdrew or deferred job offers to students from the premier engineering institutes. It had offered jobs to five IIT-Guwahati students but had later withdrawn all the offers.
PepperTap had withdrawn job offers given to students early this year. The company has recently shut its operations.
In the month of May, e-commerce giant Flipkart was at the receiving end of severe criticism and backlash after it delayed the joining dates of fresh recruits from India’s premier B-schools by seven months. To compensate for this delayed joining, Flipkart has promised a compensation package of Rs 1.5 lakh to all the candidates. However, after the spate with the IIM Ahmedabad authorities, Flipkart increased the amount to 3 lakh, which will be given to the student at the time of joining.
The company had cited reasons like working on restructuring their businesses to strike the right balance among key levers such as innovation, strategic execution, and operational excellence, as the main reasons behind the delay.
Strict action taken by IIT, IIM & ISB authorities against startups
Reportedly, as per the decision taken by IITs Placement Committee (AIPC), the first category companies are those which deferred taking students on-board, second category are companies which reduced the promised salaries and the third are those who have withdrawn their job offers. As per the meeting, 6 startups that have withdrawn their job offers given to students have been blacklisted by IIT for 2016-17. These blacklisted companies will be allowed to visit campuses next week, after they appear before the placement committee.
Indian School of Business has also decided to take a stern step against companies that are not honouring their commitment to students. As per latest reports, if recruiters are not able to absorb the students, they ‘need to pay 6 months gross salary to the student (Fixed Pay)’. And ‘recruiters not honouring the offer commitment will be banned for a minimum of 1 year or until the Placement Committee of the school decides on having them for Placements in conjunction with Student – Career Advancement Council’.
After Flipkart deferred the joining of IIM students, the authorities have placed immense pressure on the company by writing a strongly worded letter to the co-founder of the company. There was news, that because of the recent turn of events, Flipkart may also lose the coveted ‘Day 1 slot’. In addition to this, IIM-A has warned the company that the other IIM branches will also take stern action if the students are not inducted within the given time frame.For more updates, subscribe to exchange4media's WhatsApp Channel- https://bit.ly/2QUdLCK