Tech layoffs in Southeast Asia mount as unprofitable startups seek to extend their runways

More tech startups successful Southeast Asia laid disconnected workers this year, arsenic macro headwinds widened losses and task capitalists pushed startups to widen their runways.

Last week, online marketplace Carousell announced it was letting go of astir 10% of its headcount — oregon astir 110 positions.

In November, Indonesia's GoTo Group — a merger betwixt ride-hailing elephantine Gojek and e-commerce marketplace Tokopedia — cut 1,300 jobs oregon astir 12% of its headcount.

Both companies cited challenging macroeconomic challenges.

They articulation Sea Group and different companies successful the portion successful downsizing headcount. Sea Group, according to section media, laid disconnected much than 7,000 employees implicit the past six months.

"Founders are being prudent by managing costs successful this situation to guarantee determination is capable runway till precocious 2024," Jia Jih Chai, co-founder and CEO of Singapore-based e-commerce marque aggregator Rainforest, told CNBC. Chai was previously a senior vice president astatine Carousell and a managing manager astatine Airbnb.

"There are signs that we are entering into a recession, if we are not already successful one. Therefore, lawsuit request is apt to beryllium slower successful 2023," said Chai.

In a enactment to Carousell's employees, CEO Quek Siu Rui acknowledged "critical mistakes" were made. He said helium was "too optimistic" astir the Covid betterment and underestimated the interaction of increasing his squad excessively quickly.

"The world is that we were speedy to turn our expenses and hire, but the returns took longer than expected," said Quek, adding that determination person been cost-cutting measures successful the past fewer months and Carousell's enactment volition instrumentality voluntary wage cuts.

Quek besides said it's lone prudent that the institution get to profitability arsenic a radical arsenic rapidly arsenic possible, arsenic it is unclear if marketplace conditions volition improve.

Carousell posted a slower gross maturation of 21% successful 2021 astatine $49.5 million, compared to a tripling of its gross successful 2020. Meanwhile, GoTo saw its losses swell from the January to September period.

"I was astonished that companies predicted that the Covid behaviour changes would past forever," Alex Kantrowitz, a Silicon Valley journalist, who besides runs an autarkic newsletter and podcast called Big Technology, told CNBC's "TechCheck" Monday.

"Clearly, erstwhile you are allowed to spell retired to restaurants, bent retired with friends outside, your usage of Netflix, Facebook, Shopify and Amazon would spell down. So wherefore bash each of them physique arsenic if that would past forever?"

"Previously, the companies were designed for accelerated growth. So determination needs to beryllium changes made erstwhile the enactment is shifting from beardown maturation to sustainable growth. For example, you whitethorn not request excessively galore selling radical if the selling fund is cut," said Jefrey Joe, co-founder and managing spouse astatine Indonesia-based Alpha JWC Ventures.

Tech startups successful Southeast Asia are inactive mostly unprofitable, with names similar Sea Group and Grab amassing billions of losses annually.

Existing investors successful the institution are besides actively advising founders to hole for winter, Jussi Salovaara, Antler's co-founder and managing spouse for Asia, told CNBC. Venture capitalists are pushing founders to person a longer runway, helium said.

Southeast Asia tech layoffs successful 2022

"We accidental to the founders that they request to beryllium prepared that adjacent twelvemonth is not going to beryllium easier than this year," said Joe.

"These companies whitethorn beryllium doing good operatively. They inactive person immoderate growth. They mightiness beryllium adjacent to profitability, but they request to marque definite that they're sustainable for the future," added Salovaara.

Tech companies are lone seeing the opening of layoffs, said Kantrowitz.

Globally, tech companies person been conducting wide layoffs, particularly the U.S. tech giants. For example, Meta chopped astir 11,000 jobs portion Microsoft reportedly laid disconnected little than 1,000 radical owed to a slowdown successful growth.