The start-ups have attained a significant position in the Indian economy. The Indian market has witnessed a massive shift from already established huge ventures to newly innovative start-ups. These start-ups are none other than any newly established company, but there lies a difference where these start-ups have given a major boom in the areas where technology can be used as a consumer-friendly mean. The Start-up India scheme, recently launched, has accelerated the pace for entrepreneurs to transform their innovative ideas into a profit-making venture. The start-ups like Zomato, Flipkart, Oyo Rooms, are one such example, where young and charismatic entrepreneurs have been skilfully able to channelize their ideas into a business venture. These are amongst the top successful start-ups ventures.
Nowadays, start-ups have created an environment that is attracting many young professionals to create their own ventures or associate with a start-up company. But, certain aspects are looming around which have been taken as a negative aspect to this growing phenomena. One such issue is the inclination towards the lay-offs. The term lay-off has been given a statutory significance under the Industrial Dispute Act. But, in a general view, it can be understood as a temporary or permanent discharge of a worker/employee.
Now, the question arises that why the start-ups has a rising inclination towards lay-offs? Why the entrepreneurs have been discharging their employees? The start-ups have been seen as an idea for generating a large number of employment opportunities. Then, why such a downward trend has been adopted? The start-up ventures have not fully established their hold in the market, and the governmental schemes to promote these can be seen as a failure due to growing rates of lay-offs. According to Ravi Gururaj, NASSCOM product and executive council, start-ups fire employees under four circumstances:
- They don’t have money
- They want to raise funds
- They don’t plan properly and over hire
- They hire the wrong talent
These observations can be very constructive to analyse the situation in the start-up world. The first observation connotes to the non-availability of the capital. The companies usually adopt this mode for increasing their burn-rate. For any venture to grow, the availability of the initial capital is essential, and in situations where there is a dearth of funds then the company often lay-off the employee. Laying off under this situation becomes critical because the company could not pay for the work, and such steps are taken to discharge the extra workforce. By using this mean, the companies can also raise funds and plan their strategies more efficiently.
The start-ups are opened by young individuals who may lack the experience of the business culture. The lack of experience may lead them to commit certain mistakes. Such mistakes could be the improper planning on establishing a venture. A venture is not started only with an idea, but the key lies in the proper implementation of that idea. The proper implementation can be effective only when the strategies are formulated after sound deliberations. The planning as one of the most indispensible factor for a business is imperative to transform the idea into a profit-making business. Therefore, the lack of planning and experience has led to the over-hiring of professionals. After hiring, the allocation of work is significant and if the work is not allocated as per the credentials, then the workforce would only be a burden to the business. These drawbacks have hugely led to the laying off of many professionals.
So, the analysis laid down on the points can be one of the reasons for the growing inclination of start-ups to lay-offs. The profitability is must for any business to sustain in the market. Therefore, laying-off strategies are mostly used whenever the profit margin drops and the companies are unable to maintain their expenses. The government must also be cautious of this situation because it is a huge opportunity for the Indian economy to build an abundant workforce. The Start-up India Scheme must not be restricted to papers, and the efficient implementation of policies must be supervised and carried forward.