Redundancies in the Tech Start-Up Sector
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Posted on 23 January 2023

​The Rise & Fall Of Tech Start-Ups

When Gojek launched in Indonesia, it brought convenience and accessibility to the transportation industry. The success of Gojek sparked a flood of other companies as venture capital money flowed into the market.

The influx of venture capital money put pressure on the recruitment market as traditional companies lost employees to tech start-ups with money to burn. High salaries and perks such as glamorous offices, pool tables, beanbags and work-from-home days were offered, making it difficult for traditional companies to compete.

As more and more tech start-ups entered the market, there was a sense of excitement and a gold rush mentality. However, the financial health of these companies was often overlooked. Many candidates in the sector were attracted to high cash burn rates and the potential of an idea, rather than the sustainability of the company.

Unfortunately, as these companies went public, the market decided on their true value. Bukalapak's share price is down 75.66% from its initial offering, Grab is down -69.84% and Goto Tokopedia is down -69.68%. It has become clear that the market is not favorable to companies that spend more money than they make.

Thousands Of Redundencies Every Month

Venture capital companies are now demanding that their investments demonstrate the ability to be profitable in the future. As a result, many tech start-ups have had to cut employee numbers. The job market in Indonesia is resilient, but transitioning from the tech start-up sector to a more traditional, profitable company may require a drop in salary expectations.

Luckily, Indonesia has a resilient job market and there are always opportunities to secure alternative employment. The issue now is can the people being made redundant adapt to working for traditional profitable companies? Will they now accept a slight drop in salary in exchange for sustainability?

Only time will tell but it's important for people who are transitioning from the tech start-up sector to be flexible with their salary expectations, as profitable companies may struggle to match current salary levels.

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