The layoffs come on the back of the company scaling down operations across various metro and non-metro cities including Pune, Kolkata and Ahmedabad, people in the know told ET. It has also outsourced functions such as – asset management including repair and maintenance as well as asset collection for returns – to third party players, people quoted above said.
“The company has suspended operations across Kolkata, and other cities…these were places it was looking to aggressively scale earlier…They have laid off close to 200-220 employees this year..,” said a person in the know who did not want to be named.
The Bengaluru-based startup is backed by the likes of UAE-based CE-Ventures, Zinnia Global Fund, Lightbox, Bollywood actor Aamir Khan, among others. The rental startup has raised $60 million since it was founded in 2012 by former Goldman Sachs and Morgan Stanley executive Ajith Mohan Karimpana. It competes with the likes of Rentomojo and Cityfurnish.
“What is surprising is that the company was ramping up its hiring last year and then suddenly decided to retrench employees…This has caused uncertainty in the company. The current employees were informed of the layoffs in a town hall by the top management.” said a person who spoke on the condition of anonymity.
Two other people confirmed that the restructuring exercise was aimed at cutting costs at the firm.
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In July, last year, the decade-old company
raised $140 million (Rs 1,000 crore) in a mix of debt and equity led by Zinnia Global Fund.
When ET reached out, Furlenco confirmed the development on Saturday, stating that it has laid off close 180 employees, in the months of January and February, this year. It further clarified that most of the layoffs were in customer support roles, with operations, technology and sales functions of the team being unaffected.
The company also said that it has temporarily suspended operations across Kolkata, Mysuru, Chandigarh and Jaipur, as it looks to move towards a leasing model for its warehouses, to save costs. It said that it will restart operations in these geographies.
Post the retrenchment, the company has an employee count of 350.
“The decision is a part of a larger cost restructuring exercise to focus on creating an asset- light model. We hired close to 200 people last year, with almost 150 of them being across customer engagement functions. Another 35 members were added in technology functions. These hirings were made to cater towards increased customer demand,” Karimpana, founder and chief executive officer of Furlenco, said in response to ET’s queries.
“With technology automating most of the customer-facing functions now, we had to let go of these employees, since their roles had become redundant,” Karimpana added.
The company has also taken the decision to return the $120 million debt that it raised, as a part of the last fundraise in July 2021, Karimpana added. It had utilised only $2 million from the round, he added.
When asked as to why the company did not have a contingency plan to absorb these new hires, Karimpana said, “We had no choice but to hire most of these employees since our ratings were getting affected, and we did not know when we would be able to automate customer management functions. We tried to absorb almost 20 members of the customer engagement team and placed them in the operations team. However, there was a large number which did not have the skill sets to be absorbed in other functions,” Karimpana told ET.
The news of downsizing at Furlenco comes at a time when a bunch of Indian startups have laid off employees in a bid to conserve cash as institutional funding starts to dry up, fuelled by the volatility in the public markets.
Earlier this year, Mumbai-based edtech, Lido Learning laid off close to 150-200 employees. Larger unicorns including Unacademy have also trimmed its workforce, letting go consultants as well as several tutors. Others like digital ledger and bookkeeping solutions provider OkCredit
sacked 40 employees to realign its focus on fintech offerings.
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