In January 2023, Exotel, a prominent SaaS startup in Bengaluru, laid off 142 employees, accounting for 15% of its workforce. This move followed a revision in the company's Performance Improvement Plan policy. We'll delve into what happened, why it occurred, and the potential future impact of these layoffs.
Exotel's decision to lay off 142 employees was driven by a combination of internal restructuring and economic pressures. The company revised its Performance Improvement Plan (PIP) policy in November 2022, removing the clause that allowed two warnings for below-par performance. This change led to the identification of employees whose performance did not meet the new standards. Additionally, Exotel's CEO, Shivakumar Ganesan, highlighted the need to manage losses and prepare for a pre-IPO funding round, which necessitated cost-cutting measures. These layoffs are part of a broader trend in the SaaS industry, where companies like Freshworks and Chargebee are also reducing their workforce due to macroeconomic conditions and the need for financial efficiency.
Exotel's recent layoffs are expected to yield significant cost savings by reducing immediate operational expenses. In the short term, this move aims to manage financial losses, potentially keeping them to INR 44 Cr with a 15% salary hike. Long-term, Exotel plans to raise a pre-IPO funding round to fuel growth, targeting a reduction in losses to INR 30 Cr next year.
Strategically, Exotel is focusing on executing its revised Performance Improvement Plan and raising funds to support growth. The company is also emphasizing putting a revenue figure on every engineering project, indicating a shift towards accountability and revenue generation. This structured approach positions Exotel for recovery and consolidation in FY24, with bold growth initiatives planned for FY25.
Exotel's layoffs are likely to reverberate through the support industry, signaling a shift towards heightened performance expectations and cost-efficiency. As Exotel tightens its Performance Improvement Plan, other companies may follow suit, leading to stricter performance metrics across the sector. This trend could result in increased job insecurity but also drive a more competitive and efficient workforce. Additionally, the absence of severance packages highlights a growing industry norm, potentially influencing employee retention and morale. Overall, these changes may prompt support industry players to reassess their operational strategies and workforce management practices.
Exotel laid off 142 employees due to internal restructuring and economic pressures, aiming to manage losses and prepare for a pre-IPO funding round. This move is expected to yield cost savings and drive accountability. The layoffs may lead to stricter performance metrics across the sector, increasing job insecurity but fostering efficiency. Exotel's future likely involves bold growth initiatives and a focus on revenue generation, potentially reshaping industry standards.
