Home/ Companies / News/  Udaan lays off over 2,000 contractual employees as covid-19 hits supply chains

B2B commerce start-up Udaan has laid off over 2,000 contractual employees across different business roles such as sales, marketing, operations, and credit collection, said four employees, who spoke on condition of anonymity.

Udaan is an online marketplace that facilitates buying and selling of fashion products, groceries and electronics among manufacturers, brands and retailers. It was incorporated in June 2016 and since then, it has expanded its operations to 900 cities.

A majority of the contractual employee base acted as 'fleet-on-street' for Udaan, helping the startup acquire buyers and suppliers in the Kirana store segment. The Bengaluru-based unicorn is currently also servicing orders relating to essential goods through their partners.

Over the past month, Udaan has been facing a drop in business under their non-essential categories including electronics, kitchen accessories and others which also are high ticket in transactional value, as compared to essential goods.

"Internally, it is still uncertain when the economy will swing back to complete normalcy. There is also a fear that the country might go on to another extended lockdown, after May 3. It could also be that the country might open up the economy and announce another shut down, later if the covid-19 relating cases might continue, leading to Udaan taking steps to layoff employees," said one employee mentioned above.

Udaan's contractual employees in North India were the worst affected, said the first employee quoted above. According to the first three employees quoted above, Udaan had hired several employees on contractual roles via human resource consulting firms, especially for ground operations.

"In this unprecedented breakout of coronavirus, we are adapting to the structural changes in demand in India which is impacting our current infrastructure. We are compelled to restructure our teams which has unfortunately made some roles redundant," said an Udaan spokesperson.

Udaan also said that each associate who has been impacted is provided with additional compensation of one month and will be part of the priority hiring list where they would be given preference to join Udaan when a relevant opportunity exists within the system. Additionally, associates affected and who are covered under Udaan's medical insurance scheme will continue to get medical insurance benefit for an additional period of 3 months.

The B2B startup's contractual employees had received intimation directly from the consulting firms about their contract termination on April 24th. Mint has reviewed a copy of the termination letter circulated with employees.

“We inform you that, due to the closure of the project assigned to you, your employment with POONAM IT CONSULTANT PRIVATE LIMITED (HR consulting firm for Udaan) will come to an end with effect from 24-April-2020. You will be paid an amount equivalent to one month gross salary as separation pay with all other committed dues applicable such as incentive, reimbursements etc. up to 24-April-2020. Your benefits will cease with effect from 24-April-2020, (except Group medical insurance, which is extended for 3 months till July 2020 as per policy & eligibility)," said a letter circulated to an employee, who was laid off on Friday morning.

Mint also reviewed a copy of a letter circulated by consulting firm TeamLease, which also provided employees on contract to Udaan.

Over the past month, fleet-on-street and delivery personnel have been facing challenges in terms of procuring necessary passes for movement and delivery of goods, which is adversely affecting their employment status, said another employee who worked closely in the operations department of Udaan.

“We are a staffing company that caters to the demand of our customers across various industries. We are the waiter in the restaurant, not the chef. Springboard in good times, shock absorber in bad times. It is important to accept and acknowledge that capital doesn’t pay the salary of people, while it has for the last two months, economic activity does," said Rituparna Chakraborty, co-founder, and senior vice president, TeamLease in response to Mint’s queries.

"In the specific instance, we have followed all necessary provisions of the law and adhered to the advisories of labor officials ensuring there is no cessation of employment during the lockdown and all statutory dues have been/are being paid and statutory deduction have been remitted to their social security accounts to ensure they can make use of the benefits. We are also extending the option of online skill upgradation as well as redeployment options to candidate in distress based on the available openings during the Covid lockdown scenario," added Chakraborty.

The startup which is currently valued at around $3 billion was founded by former Flipkart executives Amod Malviya, Sujeet Kumar, and Vaibhav Gupta. It has raised over $800 million till date from investors such as Tencent, Altimeter Capital, Lightspeed Venture Partners, DST Global, and others.

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Updated: 25 Apr 2020, 10:18 PM IST
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