Introduction
In a move that highlights the challenges of scaling and sustaining profitability in India’s competitive social media landscape, ShareChat, the Google- and Temasek-backed social media unicorn, is set to reduce its workforce by about 5%. This decision, which translates to approximately 20-30 employees, comes as part of its annual performance review cycle. Despite the layoffs, the company asserts that the measures are not linked to its profitability drive but are part of its strategy to maintain a high-performing workforce.
Credits: The Financial Express
Annual Appraisal Cycle: A Recurring Practice
Every year, ShareChat runs two assessment cycles: one at the start of the year and another in the middle. Underperforming workers, who usually make about 3–4% of the workforce, are identified and requested to depart during these cycles. For the past four years, it has been a component of our performance philosophy, an official from the corporation explained. If someone is not contributing or demonstrating their ROI (return on investment), they are asked to leave, and if needed, they are replaced.
The company currently has between 530 and 550 employees. In sharp contrast to its peak employment of over 2,800 people a few years ago, its number will reduce to about 500 employees after the layoffs.
A History of Workforce Reduction
The upcoming round of layoffs is not an isolated event. ShareChat has conducted multiple rounds of job cuts over the past two years:
January 2023: Over 600 employees were laid off in a major cost-cutting exercise.
December 2023: Another 200 employees were let go as part of restructuring efforts.
August 2024: Around 30-40 employees were dismissed following a bi-annual performance review.
In total, ShareChat has laid off more than 850 employees across at least four rounds since 2023. This trend reflects the broader struggle of Indian social media platforms to achieve scalability and monetization.
Balancing Cost Optimization and Growth
Despite the layoffs, ShareChat insists that its current job cuts are unrelated to financial pressures. Instead, they are driven by its commitment to maintaining organizational efficiency and high performance. “This (job cuts) has nothing to do with our profitability journey,” said the spokesperson.
It looks like ShareChat’s cost-cutting efforts are paying off. In FY24, the company’s EBITDA losses decreased by 67% to ₹793 crore from ₹2,400 crore in FY23. Similarly, total losses before taxes decreased from ₹5,143 crore in FY19 to ₹1,898 crore in FY24, a 63% decrease.
The livestreaming market has become a major source of income, growing 41% annually to ₹402 crore. As of October 2024, ShareChat claims to have reached overall profitability, with an EBITDA margin of more than 15%. In the meantime, Moj, its platform for short videos, has achieved operational profitability and is expected to reach complete profitability by FY25.
Leadership Changes and Growth Initiatives
ShareChat has hired Nitin Jain, a former TikTok executive, as its Chief Technology Officer (CTO) in an attempt to strengthen its technological prowess and user acquisition tactics. With three important roles still unfilled, the company also wants to grow its acquisition marketing team by 50% and has appointed a new head of acquisition marketing.
The spokeswoman stated, “We are hiring and firing at the same time.” “This reflects our continuous efforts to invest in key growth areas and optimize our workforce.”
Credits: Money Control
Challenges in India’s Social Media Landscape
Following the prohibition on Chinese apps, a slew of platforms such as Koo, Chingari, and Mitron have emerged in the Indian social media ecosystem. Nevertheless, a lot of these platforms have had trouble growing or making money. Even though India has one of the biggest user bases for international behemoths like Facebook, Instagram, and X (previously Twitter), the low average revenue per user (ARPU) in the nation continues to be a major obstacle.
ShareChat stands apart from many of its competitors thanks to its ability to overcome these obstacles, cost-cutting initiatives, and profitability-focused approach. Its long-term viability, however, will depend on striking a balance between staff rationalization and innovation.
