Despite a rapid shift to the virtual workplace, tech startups have been hit hard by Covid-19, with the world's 10 largest cutting over 25 000 jobs since March 2020, according to information submitted via a public database. Top of the list is global ride hailing firm Uber, with some 7 500 job losses - or around 30% of the total.
UK website Buy Shares has produced a report on job losses in tech startups using data in the public domain and on live database layoffs.fyi, which has been tracking tech startup job losses since early March 2020. Layoffs.fyi is regularly updated with crowdsourced information regarding companies of all sizes.
As of 13 January 2021, there are over 630 records of job cuts in the tech sector in various parts of the world, with each cut affecting anything from 4% to 100% of a company's workforce.
Among the smaller companies, of those that have lost 75% or more of their workforce, or else been forced to shut down, many are in the travel, tourism or leisure sector. But others are also in the education sector, offering support or tutoring. Others are in real estate. Many are in retail or e-commerce.
Top 10 suffering too
Among the top 10 largest tech startups, the casualties run into the thousands.
By May 2020, Uber had already completed two rounds of layoffs impacting 25% of its workforce, and shut 45 of its offices worldwide. At the time, the company also said it was shutting down its tech incubator and AI labs as it had lost some 80% of its business due to lockdowns across the globe.
Following on Uber's heels in this category is online travel and accommodation service Booking.com with 4 375 layoffs, followed by e-commerce dealmaker Groupon at 2 800.
Online rental platform Airbnb was fourth with 1 900 job losses, followed by online tutoring platform WhiteHat Jr at 1 800.
Insurance aggregator PaisaBazaar ranked sixth with 1 500 job cuts, followed by travel agency Agoda with 1 500 registered layoffs. Personal styling company Stitch Fix laid off 1 400 workers, while ride-sharing platform Ola also laid off 1 400.
The financial industry's Stone had the least jobs cut, bringing up the rear in tenth place at 1 300.
Tough climate before the pandemic
"When the coronavirus pandemic first hit in March, the companies braced themselves for tough times ahead by adapting to new operating models like shifting to low-cost areas and enabling remote working.
"Some also resolved to hire part-time employees since they still had some funding. However, as the uncertainty from the pandemic grew, venture capitalists funding dropped significantly. Layoffs were projected to be a direct impact of the funding crunch," the report noted.
The report added that startups were facing significant challenges even before the pandemic.
"At a period marked by economic uncertainty and revenues affected by containment measures and a significant drop in demand, startups were already battling many challenges.
"Limited resources, winning customer trust, and stiff competition are just some of the challenges synonymous with startups before the pandemic. Coupled with the effects of the health crisis, the startups were forced to take radical measures to survive."