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Shopify’s Q1 earnings beat analyst estimates, and the company’s shares soared on Thursday. However, despite this good news, the Canadian e-commerce giant also announced that it is cutting 20% of its workforce.
It is the second round of job cuts Shopify has taken since the pandemic. Last July, the company laid off 10% of its workforce after it misjudged how long the Covid-fueled e-commerce boom would last.
Additionally, Meesho, the e-commerce startup backed by SoftBank, recently announced the layoff of 251 employees, making up 15% of its team strength.
In a memo posted on the Shopify website, CEO Tobi Lütke stated that layoffs had a “crushing impact” on some employees. At the end of 2020, Shopify had around 11,600 employees and contractors, meaning the layoffs equate to over 2,300 jobs.
Apart from this, the layoff in Meesho took part in a massive restructuring exercise to achieve sustained profitability. Co-founder and CEO Vidit Aatrey expressed that the company made some judgment errors in over-hiring ahead of the curve, leading to an inflated organisational structure.
Meesho had previously fired around 400 employees in April 2022 of its grocery business – Farmiso. With the present layoffs, the total number of employees affected has now jumped to 651.
The downsizing of teams at tech companies is not a new phenomenon. We are witnessing this in recent years as investors and businesses strive to become more efficient and lucrative.
While this is undoubtedly a difficult moment for the people impacted, it is vital to stress that corporations are not acting maliciously against their employees. It is a daunting economic choice that the firm should make to exist and continue to offer jobs and services to its consumers.
Companies should also ensure they have taken all required precautions to safeguard their employees' safety and well-being and give them essential assistance at this difficult time.
—Kritika Singhal
Also, Read Quarterly Results of Hero MotorCorp shows 31% profit growth
