Swiggy plans to lay off 380 jobs and close its meat marketplace as the Prosus Venture and SoftBank-backed Indian food delivery giant tries to navigate the market downturn that has forced companies to become leaner and more disciplined.

In an email to employees on Friday, Swiggy co-founder and CEO Sriharsha Majety said the startup has advanced its plans for profitability and needs to make tough decisions to save money. The Bengaluru-based startup, which was valued at $10.7 billion in a funding round last January, employs about 6,000 people.

Majety said the startup, as with other companies in the global category, outperformed expected growth in food delivery. “This meant that we had to reassess our total indirect costs to meet our profitability targets. Although we had already taken actions for other indirect costs such as infrastructure, offices/facilities, etc., we also had to correctly determine our total personnel costs in line with projections for the future. Our over-hiring is a case of poor judgment, and I should have done better here,” he wrote to employees.

“Over the past year, we have also identified many areas for improvement in our pace of execution. Due to the iterative structure of the different organizations, some extra layers have been created in the pockets. This definitely increased our communication overhead and compromised our agility. This meant that in these cases we were doing less with more rather than doing more with less.”

Majety said the startup plans to close its meat marketplace “very soon” as well.

“While we remain fully committed to exploring new business opportunities, we have also been reviewing some of our existing new verticals. As of very soon we will close our meat marketplace. While the team has done exceptionally well with solid input, despite our iterations, we haven’t hit the product market here. From a customer perspective, we will continue to offer meat delivery through Instamart. We will continue to invest in all other new industries.”

Affected employees will receive severance pay of three to six months and additional days based on each year of service at startup, Majety said in the email. Swiggy will also accelerate their final abyss and provide medical insurance for them and their dependents until May this year.

The job cuts, which were in full swing last year, have continued into 2023. Dozens of startups including Zomato, Ola, Byju’s, Unacademy, Cashfree, CoinDCX, Dunzo and ShareChat have laid off staff in recent months. According to industry estimates, more than 20,000 people in India’s start-up workforce have lost their jobs since the market’s downturn.

Swiggy hired a group of bankers last year to evaluate plans for a $1 billion IPO by 2023, australiabusinessblog.com previously reported. It is currently waiting for market conditions to change before the plan goes ahead.

The funding winter for the startup ecosystem could last another 12 to 18 months and the industry could struggle with “a lot of turmoil and volatility,” e-commerce giant Flipkart chief executive Kalyan Krishnamurthy warned late last year.

“My guess is that many startup founders will hit the market between April and June next year, and that is the moment of truth for the ecosystem,” he said.