Mohalla Tech Pvt Ltd, the company behind ShareChat and its similar short video app Moj, is closing its Bangalore office, laying off around 500 staff. Even though Moj had gained a large user base in the wake of TikTok’s prohibition in India, the app was still up against tough competition from YouTube and Instagram. ShareChat is worth $5bn and employs over 2,200 people. About 500 of these 2,200 employees will be let off shortly.
Mohalla Tech Pvt Ltd of Bangalore owns both ShareChat and Moj. The firm stated in a statement that it took the choice to lay off 500 workers in order to “prepare the company to persist through external macro issues that effect the cost and availability of capital.”
Investors have been putting pressure on IT companies and startups to reduce costs owing to high valuations in an unsteady stock market, which has led to the layoffs. Companies like Google and Temasek invested in ShareChat. With “many external macro issues that effect the cost and availability of capital,” the corporation “has to prepare itself to withstand” the layoffs.
A spokesperson for the company stated today that “as capital becomes expensive, companies need to prioritise their bets and invest in the highest-impact projects only,” which led to the company having to lay off about 20% of its incredibly talented employees who have been with the company since its inception.
In December 2022, Mohalla Tech laid off roughly one hundred individuals due to the shutdown of the Jeet11 online fantasy game platform. The company claims that it has increased its monetisation efforts and streamlined its costs across the board during the previous six months.
The spokesman said that the decision to cut labour expenses was made after great thought and in light of the developing market consensus that investor attitudes would remain highly cautious throughout this year.
Mohalla Tech will pay the employee’s full salary for the notice period, plus two weeks’ pay for each year of service, full variable pay until December 2022, and ongoing health insurance until June 2023 as part of the severance package.
Additional company property, such as laptops, will be returned to departed workers, and vested Employee Stock Option Plans (ESOPs) will remain in effect until April30, 2023.
Mohalla Tech’s ad revenue, which is mostly attributable to the ShareChat app, increased by 30% year over year in FY22. Mohalla Tech’s total spending in the 2021 fiscal year was 3,407.5 crore, up from 1,557.5 crore the previous year. Increases in advertising, employee perks, and information technology expenditures all had a role.
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