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Tech layoffs in Southeast Asia grow as unprofitable startups extend runways

by Ozva Admin
Tech layoffs in Southeast Asia grow as unprofitable startups extend runways

Shopee has reportedly made three rounds of layoffs this year as its parent company Sea Limited struggles to achieve profitability.

Lauryn Ishack | Mayor Bloomberg | fake images

More tech startups in Southeast Asia have laid off workers this year, as macro headwinds amplified losses and venture capitalists pushed startups to widen their leads.

Last week online market Carousell announced that he would let go about 10% of its workforce, or approximately 110 positions.

In November, Indonesia go to group — a merger between ride-sharing giant Gojek and e-commerce marketplace Tokopedia — cut 1,300 jobs or about 12% of its workforce.

Both companies cited challenging macroeconomic conditions.

There are signs that we are entering a recession, if not already in one. Therefore, customer demand is likely to be slower in 2023.

They join sea ​​group and other companies in the region in reducing staff. sea ​​group, according to local medialaid off more than 7,000 employees in the past six months.

“The founders are being prudent in managing costs in this environment to ensure there is enough runway until the end of 2024,” Jia Jih Chai, co-founder and CEO of Singapore-based e-commerce brand aggregator Rainforest, told CNBC. Chai was previously a Senior Vice President of Carousell and CEO of Airbnb.

“There are signs that we are entering a recession, if we are not already in one. So customer demand is likely to be slower in 2023,” Chai said.

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In a note to Carousell employees, CEO Quek Siu Rui acknowledged that “critical mistakes” were made. He said he was “overly optimistic” about the Covid recovery and underestimated the impact of growing his team too quickly.

“The reality is that we rapidly increased our spending and hiring, but the returns took longer than expected,” Quek said, adding that there have been cost-cutting measures in recent months and that Carousell’s leadership will take voluntary pay cuts.

More sustainable growth

Quek also said it is prudent for the company to reach profitability as a group as quickly as possible as it is unclear whether market conditions will improve.

Carousell posted slower revenue growth of 21% in 2021 to $49.5 million, compared to a tripling of its revenue in 2020. Meanwhile, GoTo saw its losses increase from the period from January to September.

“I was shocked that companies predicted that the behavioral changes from Covid would last forever,” Alex Kantrowitz, a Silicon Valley journalist who also runs an independent newsletter and podcast called Big Technology, told CNBC.technical check” Monday.

“Clearly, once you’re allowed to go out to restaurants, hang out with friends outside, your use of Netflix, Facebook, Shopify, and Amazon will go down. So why are they all building like that’s going to last forever?”

Tech companies are only seeing the beginning of layoffs, says Big Technology's Kantrowitz

“Previously, companies were designed for rapid growth. Therefore, changes are necessary when the organization is transitioning from strong growth to sustainable growth. For example, you may not need as many marketing people if you cut back on marketing budget,” he said. Jefrey Joe, Co-Founder and Managing Partner of Indonesia-based Alpha JWC Ventures.

Tech startups in Southeast Asia are still largely unprofitable, with names like Sea Group and Grab racking up billions in losses annually.

Existing investors in the company are also actively advising founders to prepare for winter, Jussi Salovaara, Antler’s co-founder and managing partner for Asia, told CNBC. Venture capitalists are pressuring founders to have a longer run, he said.

Tech layoffs in Southeast Asia in 2022

Start up Affected Employees
flashes 18% of the total workforce
sea ​​group 7,000+
go to group 1,300
zenio 200+
carousel 110
foodpanda 60
Carsome Less than 10% of the total workforce
iPrice Group fifty
save 31
*This list is not exhaustive

Font: CNBC investigation

“We tell founders to be prepared so next year won’t be any easier than this,” Joe said.

“These companies may be doing well operationally. They still have some growth. They may be close to profitability, but they need to make sure they are sustainable for the future,” Salovaara added.

Tech companies are only seeing the start of the layoffs, Kantrowitz said.

Globally, technology companies have been make mass layoffs, especially the American tech giants. For example, Goal eliminate some 11,000 jobs while Microsoft it reportedly laid off fewer than 1,000 people due to a slowdown in growth.

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