Tech scaleups across the MENAT region are laying off staff in an attempt to cut costs. Fears around Inflation, rising interest rates and geopolitical issues have all contributed to an uncertain global economic situation, and this is reflecting on the region’s rising tech companies.
Cloud kitchen company Kitopi was reported to be letting go of 93 members of its head office staff, while mass mobility services provider unicorn Swvl has reported this month that it would be terminating 50% of its staff, following a prior layoffs round back in May where it cut 32 per cent of its workforce to focus on profitability post going public.
Over in Bahrain, Rain, one of the region’s largest crypto exchanges, similarly announced job cuts earlier in the year, while Turkey’s rapid grocery delivery scaleup Getir announced around the same time it would be letting go of 14% of its staff globally. Like Swvl, the decision was made after the company had reached a significant milestone, in this case, becoming a decacorn (a startup worth over $10 billion).
Tech startups, especially those at later stages of life, are known to burn the candle at both ends, which translates to hiring more, expanding fast, and snapping up new business wherever it may appear. This isn’t new by any stretch of the imagination: companies like Uber have engaged in such actions since their early days.
At the closest sign of trouble, however, many of these companies are forced to stop and backtrack, and this often translates to their workforces paying the price.
In the case of Kitopi, like most other F&B businesses, it enjoyed a massive surge in 2020 and 2021 as people stayed home and ordered food online. However, with the COVID-19 pandemic mostly behind us, the region’s diners are flocking back to restaurants, especially with the FIFA 2022 World Cup currently in progress.
For Swvl, the company has been cutting jobs to attain profitability, which is a top priority for it now that public shareholders have entered the mix following its listing on NASDAQ. It’s also scaling back discretionary spending and focusing on its key markets, primarily Egypt and Mexico. This is also partially due to its shares selling on NASDAQ for less than $1 ($0.40 as of this writing), which over a prolonged period of time can lead to it being delisted from the exchange.
Rain announced its layoffs in the first half of the year, as crypto markets continue to go through a tumultuous period of successive ups and downs, the latest victim of which has been the high-profile exchange FTX. Despite all their hype as decentralised currencies, crypto’s current state shows us that these digital assets aren’t as far removed from the affairs of global economics and financial markets as believed.
Over in Turkey, the Abu Dhabi Growth Fund-backed Getir has had to cut jobs at home and across its multiple markets in Europe, due to rising global inflation and costs, as per a source cited by Reuters. Gorillas, a German rival operating in the same markets, had also announced layoffs, indirectly confirming the unnamed individual’s indications.
For now, it seems that the honeymoon phase is over for many of the region’s rising tech stars, and it’s time to strap in, refocus, and reprioritise which verticals and markets matter most.