Boost for SpiceXpress, layoffs in Amazon, vanishing white collar jobs and more

News View talks about $100 million investment for SpiceXpress and Logistics, Amazon fires 500 more employees, ZestMoney co-founders quitting firm, declining white collar jobs and Indian families opening up to discuss money matters

SpiceJet passengers offloaded
Both sides have signed a memorandum of understanding (MoU) as part of the investment deal, the SpiceJet said in a release on Monday. File photo

SpiceXpress and Logistics to receive a $100 million investment from UK group

The UK-based SRAM & MRAM Group will invest $100 million in SpiceXpress, a subsidiary of SpiceJet. Both sides have signed a memorandum of understanding (MoU) as part of the investment deal, the airline said in a release on Monday. The agreement with the British entity also comes after a debt restructuring agreement between the Indian carrier and aircraft lessor Carlyle Aviation Partner wherein the latter bought a stake in SpiceXpress at an anticipated future valuation of $1.5 billion (Rs 12,422 crore).

What it implies: SpiceJet is increasingly dependent on profits from its subsidiary, SpiceExpress, to drive growth. Despite significantly higher petroleum costs, its cargo segment posted a net profit of Rs 46 crore in FY22. Analysts expect the focus on profitable cargo business will reduce the company’s losses, strengthen its P&L, and enable the parent to post a net profit of Rs 710 crore in FY24 (estimate).

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Amazon lets go around 500 in India across different functions and businesses

The current layoffs in India are part of a larger layoff announcement made by Amazon CEO Andy Jassy in late March. These layoffs have a global impact, with about 10,000 employees affected across multiple areas, around 3% of the total workforce.

What it implies: Amazon is going through a similar cycle to other foreign multinationals: it expanded its operations during the pandemic by operating additional warehouses, but post-Covid, and with a slowdown in the economy, it has had to reassess its cost structure. Also, its device business, especially Alexa, has not found enough traction as projected, and there could be more layoffs as the e-commerce conglomerate regroups to stabilise its operations.

ZestMoney co-founders quit the company after the PhonePe deal falls through

All three co-founders of ZestMoney, including CEO Lizzie Chapman, have resigned after PhonePe decided not to acquire the startup.

What it implies: ZestMoney is a Buy Now, Pay Later platform that enables clients to obtain immediate digital loans from the non-banking financial corporation (NBFC) Nahar Credit, which Zest Money purchased in 2019. Its immediate success led PhonePe, a subsidiary of Walmart, to initiate talks with fintech startup ZestMoney for acquisition. The acquisition would have armed PhonePe with easier access to the credit pool and higher retention rates of customers. But the deal fell after PhonePe raised concerns about the startup’s financial soundness. The failure rate of fintech startups is relatively more as the acquisition cost to acquire customers is far higher than a regular bank. Therefore, they need a steady infusion of funds, and being a fintech, regulatory requirements are much more stringent than startups in other domains.

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The disappearing white collar jobs

A Wall Street Journal article, quoting economists and corporate executives, said the jobs lost in a months-long cascade of white-collar layoffs triggered by overhiring and rising interest rates might never return. Companies are rethinking the value of many white-collar roles in what some experts anticipate will be a permanent shift in labour demand that will disrupt the work life of millions of Americans whose jobs will be lost, diminished or revamped partly through artificial intelligence. After the Facebook parent’s latest layoffs, Meta Platforms CEO Mark Zuckerberg told employees that many jobs aren’t returning because new technologies will allow the company to operate more efficiently, WSJ reported on Monday.

What it implies: AI is taking over many of the functions at the workplace, and it is becoming increasingly difficult for white-collar workers to retain their jobs. Elon Musk recently said that the AI race between companies like ChatGPT, Bing, and Bard could make AI systems far more powerful than humans. Hence, the rivalry could lead to the end of civilisation as we know it, Musk claimed. Recently, Hollywood scriptwriters have started a campaign against the increasing influence of AI and have asked studios and networks to stop using AI for writing or rewriting literary work.

About 75 per cent of Indian families discuss finances together: Survey

An aversion to discussing money matters with family, commonly known as the ‘Money Taboo’, runs deep in Indian culture. Discussing finances as a family has been misinterpreted for years as sharing personal data or perceived as inappropriate and awkward. However, with 75% of Indian families now discussing financial matters, that story takes on a positive spin.

According to a survey by Scripbox, a digital wealth manager, 64% of conversations on economic issues for people aged 35-plus dwell on monthly budgeting and expenses. In contrast, new investments and big purchases account for 60% and 54%, respectively. Among people aged 35-plus, there is an absolute agreement regarding the benefits of creating a financial plan together as a family. Over 60% of those surveyed said that it leads to a better understanding of current finances, 58% said it increases the ability to meet financial goals together, and 51% believed that it promotes more trust and understanding among family members.

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But here’s a twist. Though more family discussions are happening on general financial matters, limitations persist in making investment decisions. Younger couples (below 35) are more comfortable in discussing investments (47%), as compared to only 38% of older couples (above 35). Similar patterns are visible regarding how often people speak of such investments. Sixty per cent of younger Indians (below 35) discuss regularly compared to 42% above 35. According to the survey, the primary reason (28%) people don’t have investment discussions with their family is the lack of financial literacy.

Interestingly, around 60% of those surveyed confirmed that their families are privy to details about their investments accounts, passwords, bank accounts and insurance policies. This hints at how COVID has helped people realise their mortality and made them understand the importance of offering alternative access to financial information. Around 90% of the respondents admitted to being impacted as a family in more than one way by the overall economic uncertainty. Twenty seven per cent said it affected their family expenses, whereas 30% admitted that it made them more conscious about their savings. On a positive note, around 80 per cent of respondents above 35 believe they are well-equipped to ensure their family’s well-being.