Why Did Cogito's Layoffs Spark Employee Protests?

Startups, being the drivers of innovation and economic growth, have seen tremendous growth in recent years. However, with the ongoing funding winter and market volatility, many of them have struggled to stay afloat, leading to layoffs and protests by affected employees. 

Layoffs at Cogito amidst Funding Winter and Market Volatility

One such incident recently happened at the New York and Delhi NCR-based startup Cogito, which faced protests from its impacted employees after laying off 177 of them. 

The impacted employees protested at the startup's office, alleging that they were not given any notice before being fired and that Cogito didn't pay their salaries. Cogito claimed it laid off 177 employees as one of its clients decided to ramp down its operations. The startup claimed that it paid full salaries to the employees, and they were satisfied with its actions. 

The affected employees have reportedly expressed dissatisfaction and staged protests, claiming that they were not given any prior notice by the company. However, Cogito has maintained that it paid its employees full salaries and took appropriate actions. The company has also closed operations at its Noida office, and the protests led to police intervention on Friday, April 28th.

Cogito, founded in 2006 by Rohan Agrawal, offers training data-as-a-service (DaaS) to B2B customers.

Startup Layoffs on the Rise in India: A Harsh Reality of Funding Winter

The recent layoffs come at a time when India's startup ecosystem is experiencing a funding winter, which has forced many startups to fire employees to cut costs and increase their runway. As per reports in the media, more than 92 Indian startups have fired over 25,000 employees since the beginning of 2022.

The incident at Cogito highlights the ongoing challenges and difficulties that many startups in India and around the world are facing, particularly in the current market environment. While such layoffs can help companies cut costs and stay afloat, it's important for them to handle such situations with care and sensitivity, ensuring that they comply with relevant labor laws and regulations and provide adequate support to their impacted employees.

In a quest to slash costs and pursue profitability, Indian startups are shedding staff at an alarming rate. Reports suggest that nearly 6,000 employees have been laid off in the first four months of 2023, across 41 startups, as the funding taps have all but run dry.

This trend seems to be a repeat of last year, as, during the same time period, eight startups had trimmed their workforce and let go of over 6,040 employees. The current situation suggests that startups are willing to take the tough calls to survive and remain competitive in a cut-throat market.

Startups play a crucial role in driving innovation and creating jobs in today's global economy. However, with the ongoing funding winter and market volatility, many of them have struggled to stay afloat, leading to layoffs and protests by affected employees. The incident at Cogito is a reminder of the challenges and difficulties that startups in India and worldwide are facing. While layoffs may seem like an easy way to cut costs, companies must handle such situations with care and sensitivity, ensuring that they comply with relevant labor laws and regulations and provide adequate support to their impacted employees. By doing so, startups can build a strong foundation for long-term growth and success while creating a more sustainable and equitable business ecosystem.