On the flipside: startups make a beeline to hire sacked Yahoo engineers

8 Oct, 2014

On another day and time the large scale firing of engineers at Yahoo's R&D and engineering unit in India would have led to serious heartburn and financial crisis for those who are laid off. But in the bustling startup ecosystem in the country today, it could actually turn out to be a diwali bonus with the five-month severance pay in the bank account and numerous firms looking to grab experienced IT talent.

Internet giant Yahoo has just laid off around 300-500 employees in India, mostly engineers, as the company is looking to consolidate its operations in the country.

According to an official statement, the firm is taking its R&D operations to the US, while India will remain an operations and support centre.

As news spread of the mass firing, a bunch of local tech startups got active to bring in experienced software developers on board.

Top executives of some firms went public on the social media with an open invitation to join them. Ant Farm's founder Rishi Khiani tweeted that the incubator is hiring developers: "We have over 100 open positions. So please pass this on to any developers at Yahoo who just got sacked."

Pradyot Ghate, associate vice president at Zomato, wrote on the micro-blogging service: "Don't just go ogle, apply. We are always hiring." "Impacted by Yahoo India layoff? Minjar Cloud is hiring engineers for product engineering roles. Drop a note to careers@minjar.com," reads a Tweet from Vijay Rayapati, CEO of Minjar.

Satyan Gajwani, CEO of Times Internet Limited, the digital arm of the Times of India group, tweeted, "Yahoo techies! Want to work on all sorts of hard problems on products that millions of Indians use? Join us."

Why is Yahoo laying off engineers en masse?

Yahoo's operations in India comprise two units like most global IT firms—one involved in software development for the parent and another unit which looks after the local business operations.

According to a senior employee working at Yahoo India, there were around 3,000 employees for the firm in India until a couple of years ago, and now there are just 500-odd employees left. The company has also shut down two offices.

According to the source, the layoff started a couple of years ago since new CEO Marissa Mayer took charge. "It is a very unfortunate decision to reduce the workforce here, especially when India is one of the most happening internet markets globally. This decision has nothing to do with the company's cost-cutting plans, as Yahoo is sitting on a huge pile of money after the Alibab IPO (Yahoo is a major shareholder in Chinese e-commerce giant Alibaba and encashed $9.52 billion in the IPO)," the source said.

Does it mean Yahoo is shutting off its India business? No. The layoffs mostly affect the software team which caters to the global parent. Yahoo has also just sent a mailer for launching an enhanced version of Bollywood and showbiz content page in India (though this might be part of a PR campaign in light of the negative publicity surrounding its decision to sack en-masse).

It has scaled back its offshore software development unit and this could well be part of a cost rationalisation move, notwithstanding the cash at hand.

Remember, Yahoo had previously also sold its stake in BharatMatrimony.com, though this pre-dates Mayer taking over the reins of the company.

Mayer has floated several cost control measures and tightened HR practices, including the move to curtail flexible working practices for employees.

On the other side, Yahoo's business operations in India are a small portion of its global revenues and doesn't figure in the big agenda.

Considering rising pay packets for IT professionals, still tentative rebound in economic activity and (hence wages) back home in the US and shrinking wage arbitrage, we suspect it could be one instance of cost cutting coupled with the on-shoring trend.

But we wish best of luck to all those are laid off to get new openings quickly.

(Edited by Joby Puthuparampil Johnson)