Insurance technology startup Acko has laid off 45-50 employees of its 480-500-strong workforce, according to two people familiar with the matter. This comes as the world is grappling with the COVID-19 pandemic, forcing startup entrepreneurs to cut costs and extend their runway to keep their companies afloat.
“The layoffs are mostly across operations and marketing functions. Engineering, underwriting and other divisions will not see any job cuts,” said one of the sources on condition of anonymity. “The company has taken the call after seeking advice from investors.”
Sources added that many senior employees at Acko have volunteered to take pay cuts. Confirming the development Acko chief executive Varun Dua said that 45 employees will be impacted while the leadership has taken salary cuts ranging from 50-70%.
“Some business lines have been impacted and we don’t see them recovering for a long time,” said Dua. “We’ve been forced to rationalise in those areas and consolidate a few teams and roles. We are ensuring that every type of support is extended to our impacted colleagues including continuing insurance for them and their families.”
He also said that no further trimming of teams would be required.
Unlike most businesses, digital insurance companies such as Acko and Digit are not expected to be hit hard by COVID-19 since these companies don’t depend on offline brokers and people are likely to buy or renew motor insurance. However, since an element of uncertainty is attached to the current scenario, founders are looking at different ways to prepare their companies to weather the storm.
Backed by the likes of Binny Bansal and Kabir Misra-led RPS Investment Fund, Acko has raised over $100 million across two institutional rounds. The company was also in advanced talks to raise up to $100 million fresh round from new and existing investors. Entrackr couldn’t ascertain if the round came through or not.
Acko isn’t the only one looking at trimming the workforce or salaries. Several Indian startups and tech companies have been looking at ways to conserve cash. Travel companies MakeMyTrip and Ixigo are slashing salaries until the current situation normalises, and TravelTriangle has let go of over 250 employees.
“All founders are looking at ways to cut costs,” said an investor in the space requesting anonymity. “It’s a tough time – no one wants to layoff employees but some are not left with much of a choice.”