South Korean startups, both big and small, have launched intensive restructuring that includes mass layoffs as they fear a cash crunch amid an investment slump.

According to multiple sources from the information technology (IT) industry on Wednesday, FastFive Co., a leading office space provider, has started to advise employees in non-core divisions to resign as part of an organization reform.

“We are laying off 10~15 percent of the entire workforce as part of a portfolio adjustment to reduce non-core businesses to prepare for an economic slowdown,” said an unnamed official from FastFive.

Korean mid-size game developer Devsisters has been embroiled in a controversy lately for allegedly unilaterally firing 20 employees as it pulls out of the “My Cookie Run” project. The company explained later that the employees will be relocated to other divisions and units but the game industry believes the move is no different than asking them to quit.

Major startups like Watcha, Inc., Taling, and Sandbox Network Inc. are also undergoing a large-scale restructuring as they, like others, are in the midst of a crisis as capital slows.

Investments in startups have been on a downward hill amid inflation fears, economic recession concerns, and tech stock price plunge.

According to a report released by Startup Alliance, investment in local startups amounted to 768.1 billion won ($631 million) as of end of December last year, down 33 percent from 1.1 trillion won in the previous year.

Investors have been calling on startups for intensive restructuring to realize profit as they experience a credit crunch.

The trend is also apparent in the global scene.

Big tech companies such as Google LLC and Meta Platforms Inc. have begun job cuts to save costs and to prepare for a potential downturn.

By Na Hyun-joon, Hwang Soon-min, Woo Soo-min and Choi Jieun

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