Australian start-up sacks 10 per cent of staff due to ‘economic downturn’
The business pointed to the sudden “economic downturn” for slashing staff numbers but also said it was being under-cut by competitors avoiding regulations.
An Australian start-up has sacked 10 per cent of its workforce despite raising $40 million in funding late last year.
The company called Hireup is an online platform that assists people using the government funded disability scheme NDIS to find, hire and manage their own support workers.
Similar to Airtasker, it connects clients directly to personal carers or therapists, unlike other providers that generally are not-for-profit and focus on a region or people with a certain disability.
Its co-founder and co-chief executive Jordan O’Reilly blamed the pandemic, a sudden “significant economic downturn” and being “undercut” by competitors for slashing 35 roles from Hireup’s back office team earlier this month.
“At Hireup, we’ve also found ourselves increasingly undercut by some competitors choosing to avoid NDIS-regulation and its costs, and others opting for an ‘independent-contractor’, ‘Uber-esque’ model rather than formally employing support workers, as Hireup does,” Mr O’Reilly said in a blog post on its website.
“We are glad the Labor government is starting to pay attention to these issues which, if left alone, threaten to undermine the foundations of the disability sector.”
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He added he was “deeply saddened” to make the cuts but they would not impact on the 10,000 disability support workers employed by the company.
Hireup, which was founded seven years ago, would continue to invest in the company, he added.
Late last year, the company raised $40 million from job site Seek and said it would use it to hire more employees into the “frontline and central support office teams”, improve the service experience for customers and to grow the business including via partnerships.
National Disability Services, the industry body for NDIS providers, found last year that 58 per cent of providers were struggling to remain financially viable.
Rival also cuts staff
A competitor to Hireup, which raised $100 million from a US investment firm last year, also revealed it had laid off staff.
The company Mable said it had laid off around 10 employees from its workforce of 300.
Mable’s Co-Founder and chief executive Peter Scutt said the company remained “well-capitalised” and the redundancies represented 4 per cent of its workforce from various departments.
Mable still planned to increase its headcount next year, he added.
“As a technology-enabled solution, we are always in a state of continuous improvement to ensure we are delivering on the needs of our community,” Mr Scutt told news.com.au.
“The recent reshaping of our team reflects our evolving strategy and the evolving needs of our customers.
“As a result, we have changed the focus of some roles, created new ones, and unfortunately, some positions have been made redundant.”
Tech sector bloodbath
The start-ups from the disability sector are the latest in a round of sackings across the tech sector.
Just last week, Brisbane-based cryptocurrency company Swyftx sacked one in five of its workforce with one employee learning she had lost her job while on honeymoon in Hawaii.
Recently another Brisbane-based business a telecommunications and IT infrastructure company called Megaport revealed that a whopping $1.6 million was spent paying out the 10 per cent of employees who had been made redundant.
An Australian social media start-up called Linktree that was recently valued at $1.78 billion sacked 17 per cent of staff from its global operations, it revealed this month.
Meanwhile another crypto platform Immutable, which was valued at $3.5 billion faced a fierce backlash earlier this month after sacking 17 per cent of its staff from its gaming division, while continuing to “hire aggressively” after raising $280 million in funding in March.
Then there was Australian healthcare start-up Eucalyptus that provides treatments for obesity, acne and erectile dysfunction, which fired up to 20 per cent of staff after an investment firm pulled its funding at the last minute.
Debt collection start-up Indebted let go of 40 of its employees just before the end of the financial year, despite its valuation soaring to more than $200 million, with most of the redundancies made across sales and marketing.
The growing list of redundancies also included Australian buy now, pay later provider Brighte, that offers money for home improvements and solar power, which let go of 15 per cent of its staff in June, with roles primarily based in corporate and new product development.
Another buy now, pay later provider with offices in Sydney called BizPay made 30 per cent of its workforce redundant blaming market conditions for the huge cut to staffing in May.
Earlier this year, a start-up focused on the solar sector called 5B Solar, which boasts backing from former prime minister Malcolm Turnbull, also sacked 25 per cent of its staff after completing a capital raise that would inject $30 million into the business.
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