Why Tech Startups in Indonesia Lay Off Employees?

In recent years, the tech startup environment in Indonesia has faced a significant number of layoffs. Businesses in areas like fintech, e-commerce, and online services have had to let go of employees, and this isn’t just about saving money.

Shopee Indonesia Moved to Solo

Some of Indonesia’s biggest names have also been affected. Tempo.co reported that GoTo, Xendit, Lamudi, Ruangguru, Zenius, and Shopee Indonesia have all carried out layoffs in the past few years. These moves were often part of restructuring plans aimed at reaching profitability faster.

My high school friend who worked in Shopee Indonesia was forced to move to Solo from Jakarta as restructuring plan from Shopee. For your information, she was senior staff in Shopee Indonesia.

Even though she has worked there for 4 years, it didn’t change anything. Her salary and facilities was cut off until 50% more if she moved to Solo. Then, she decided to leave Shopee Indonesia.

Her previous facilities in Shopee Indonesia was very good. Beside monthly salary, she got many allowances for transportation , lunch, etc. When the layoff storm came, her income was cut significantly.

After the pandemic, many startups quickly expanded their teams to grab more market share. With easy access to investor money, they grew faster than their income could support. Now, with funding becoming more difficult to get, these larger teams have become a big financial strain.

According to  SERA Astra, the mix of overexpansion and reduced investment has left many startups at risk of cutting staff. The slower flow of investments is partly because of changes in the global economy. Higher interest rates and inflation have made investors more cautious.

Read Also : Why Parking at Indomaret and Alfamart Should Be Free for Customers?

An economist from INDEF told  Tempo.co that the rising cost of capital is pushing startups to focus on being more efficient, which often means reducing their workforce to keep the business afloat.

Automation is another factor. As reported by Hitabatak.com, some industries, especially media and retail, are replacing human roles with automated systems or AI-based tools. This change can reduce costs but also eliminates jobs, sometimes affecting dozens or even hundreds of employees at once.

The overall economy is putting stress on businesses. The Leap reported that layoffs are occurring in many industries, not just tech, as companies face lower consumer spending and changing market needs. For startups, this situation is making it harder to keep growing quickly.

Unrealisitic Sudden Goals

Some workers within the industry have mentioned that bad planning and unrealistic goals are also contributing factors. Posts on Reddit explain how relying too much on inexperienced staff, tight deadlines, and unclear business plans can result in poor performance, leading to layoffs.

Giving unrealistic goals suddenly to employees is one of the weapons of companies to consider layoff. For example, the previous KPI is 10, then the boss suddenly change the KPI must be 100 in 1 month without giving additional budget and facilities to the team.

The boss threat the employees with layoff if the target is not achieved. The boss actually knows the target is impossible to reach with recent resources. But, that is the truth.

After 1 month, the target is not achieved. Then, the boss easily layoff the employees. The classic reason is not achieving target which is actually unrealistic.

In summary, the reasons for tech startup layoffs in Indonesia include hiring too many people, stricter funding availability, automation, a slower economy, and internal issues. To prevent this from happening again, startups should aim for steady growth, manage their finances carefully, and stay realistic about their ambitions.

Editor : Nia Amanda