Potential of the laid-off: Second Coming

As investments slow down, it has had an effect on hiring too.

Is that true?

Let's reel back to the last quarter of 2015. In November that year, industry estimated that the layoffs could be upwards of 3,000 across well-known internet start-ups such as Housing, Zomato, TinyOwl and LocalBanya. "Firings and shutdowns happen rather routinely among many 50-100-employee start-ups," one of the online media portals had said.

Traditionally, start-ups are deemed to be good paymasters, cool working places, with a lot of fun and freedom quotient. However, there's always the Damocles Sword of unpredictability swinging over these businesses - what if the app around which a business is, fails? What if investors refuse to put in any more money?

Business closures and layoffs have happened in well-funded companies such as Housing and Zomato. The issue at TinyOwl's Pune office added a new twist, as things went out of control. Overvaluation and overdependence on funding made the founders 'bloat' companies in an environment where revenues did not move at the desired pace. After all, revenue is the key

Why blame just the start-ups? For, layoffs are here to stay.

As a contrarian view, former Yahoo Tech Editor-in-Chief Dan Tynan strikes a chord. Tynan was axed in February after a three-year plus stint with the company. As a parting shot he said: "I am sure that bigger and better things await all of us."

Indeed. The key takeaways from Tynan are that there are "bigger and better" things waiting for all those who had to be at the receiving end of company's hard decision to let them go. For a start-up founder, particularly, such decisions are tough but have to be made to survive. After all, companies have to survive and create long term value for investors!

Nonetheless, this is not the story of missing the bus. As companies look for all kinds of additions and alterations to best use their limited resources sustainably, laid-off employees must take note of the positive 'flip-factor', in companies other than the one they bid adieu to. Particularly in the start-up-enthused environment in India today where small is the new-age big word of doing business.

One may ask what's the connection here between the laid-off and the start-ups. There is indeed a deeper connect as exemplified by the US experience following the financial meltdown of 2008.

The layoffs following the meltdown sparked of an uncertainty in the future. People jumped off ledges of financial skyscrapers across the world in despair and desperation. That's how grim it looked. At the same there emerged a quiet trend, almost a throwback.

Layoffs opened more opportunities for the third-party service providers (3PSPs). For example, when a major retailer was not able to hire temp workers for a holiday rush, they outsourced the work to 3PSP to be done with lesser number of the usual hands required for such a time in previous years.

A 3PSP, says Gailen Vick, ED, Reverse Logisitics Association in the US, is "designed to be much more efficient at amortizing cost across multiple product lines while keeping overhead fixed. So when a company has to layoff, most of the time they outsource a process in order to keep customer satisfaction high."

Now fast forward to the current scenario in India where the market is the fastest growing and third-largest start-up ecosystem. In more ways than one, there are similarities between the meltdown and start-up times. For one, in both the cases resources are limited and require optimum utilization to be cost-effective. Secondly, a crisis like the subprime mortgage crisis of 2008, splits the camp into the survivors and the 'busted'. A widely held notion is that even the start-up bubble - driven by technology - is floating towards an impending bust when consolidation will see the survivors remain. Again, this will result in layoffs such as it happened with TinyOwl, Housing.com and Zomato.

Employees, who have had to give up their jobs simply because of the inability of the company they were in to foot the bill, should look up to the eco-system to get back to work. And today, the choices are plenty given the robustness of the start-up market.

Across the stakeholders, the learning is all-new and not necessary to be viewed with a pall of gloom. And this is particularly significant for the emerging businesses in India, where layoffs have become a clear and present reality. Companies do understand that the staffs shed are not necessarily 'bad' -- they were kick-ass people hired to help an organization grow at a forecast speed.

Among the many forces that influence and shape start-ups, acquired and supportive talent is key. Such businesses are always about funding the brightest minds. And the right people on board can make all the difference. In fact, any mistake on this front can result in a direct hit on growth and capability perspectives. Another key point is that limitations of resources, including talent, is a given in any start-up, thus the need for optimal performance and use count all the time. Every hand in a start-up is directly connected to its growth prospects.

It is mandated that start-ups articulate roles more clearly. Even if an individual has many roles to handle, a start-up defines each one upfront and clearly so that a professional does not feel at a loss because of non-clarity.

The start-up bosses know this and realize this, yet the rigmaroles of funding, sometimes investor whims and wishes, and abject growth twist their arms to let even the brightest go. Similar situations occurred at Yahoo India. In fact, its R&D hub in Bangalore had to massively scale down since October 2014.

The great news, however, was that some of the best techies came out of Yahoo 'shedding' and a lot of them fed the start-up ecosystem. Many of them went on to become CTOs or senior tech leaders, fuelling the environment with diverse talent, and that was great news. These once-Yahoo-now-start-up talents paved the way to an absolutely new technology-backed ecosystem - they knew how to build and scale businesses, most often on free high-support products, skills that they were never known to have or the ecosystem never felt the need of, earlier. In fact, many of these techies went on to become the first heroes of the Indian start-up ecosystem, founding companies that have made technology on our fingertips a reality.

Therefore, it would be safe to conclude, that the brilliant minds some start-ups have had to let go, are poised to initiate a second coming, a fresh level of innovation and change within. Many of the UX staff once with the Housing.com, or the former business development personnel with TinyOwl.com, are out in the market ready to fuel another round of growth, given their experience, the hustling attitude and the ability to scale fast - sure recipe for the dawn of another stream of great companies.

(The author is Founder & CEO of Myrefers)