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https://vnexplorer.net/cxa-group-to-shut-down-vietnam-tech-hub-lay-off-dozens-a2021136315.html
CXA Group to shut down Vietnam tech hub, lay off dozens
22/03/2021The tech hub was launched in 2019 to drive CXA’s core tech capabilities to serve clients and partners in other markets.
With additional reporting by Melissa Goh and Thu Huong Le
Singapore-based insurtech startup CXA Group will be shuttering its tech hub in Ho Chi Minh City, Vietnam, by April 16, according to three current and ex-staff with direct knowledge of the matter.
The sources added that Rosaline Chow Koo, founder and CEO of CXA Group, made the announcement during a town hall meeting last Thursday.
All 70 employees from the Vietnam hub will be laid off, according to the sources, adding to the terminations that affected some tech workers in CXA’s Singapore office last month.
The company had a headcount of around 329 before the downsizing, Koo tells Tech in Asia, though this number includes the 120 or so people that were part of its brokerage arm that was sold to employee benefits broker Pacific Prime.
Rosaline Chow Koo, founder and CEO of CXA / Photo credit: Tech in Asia.
Following the Vietnam shutdown, the company would be left with 120 employees, with just six in Singapore, Koo says.
“Without the brokerage, our business becomes extremely lean, as the entire tech platform is completely built out. So now we focus entirely on sales and deployment,” she notes.
Chief technology officer Thorsten Maus told Tech in Asia that he has left CXA; his Linkedin profile shows that departed in February. Maus was hired in 2019 to help set up the tech hub, which was supposed to take over the development of CXA’s platform – a task that was originally outsourced.
CXA previously said that its revenue grew 40% in 2020, with major contributions from its software-as-a-service (SaaS) business.
The company confirmed the closure of its Vietnam hub with Tech in Asia. “CXA is consolidating all of our product and technology teams into China, where we already have a large local business and existing tech team. So we are adding more regional tech capabilities into China to support our SaaS growth globally,” explains Koo.
However, CXA says it has not laid off any Singapore staff since it sold its insurance brokerage to Pacific Prime.
The company denies that financial difficulties brought on the job cuts. Meanwhile, a copy of an official termination letter seen by Tech in Asia attributes the shutdown to Covid-19.
A surprising move to some
Tech personnel from the Vietnam office have been asked to hand over their work to the staff in CXA’s China office, where the company has around 30 tech employees, according to another source.CXA’s Vietnam staff have been given termination contracts. According to the country’s labor regulations, the notice period is 45 days for an indefinite term contract and 30 days for a definite term arrangement. The CXA contract shows that the termination will come into effect on April 18 and that the last working day is two days before that.
The only severance package employees got was that they can use their private medical insurance until this September, according to a source. But some of the Vietnam staff haven’t been provided with that medical insurance yet, the person added.
The company said that it can help refer employees to other tech hubs run by CXA or another firm. But the same source said that while workers at CXA’s brokerage business have moved to Pacific Prime after the acquisition, staff for the SaaS business have been told to leave.
At the time of the sale, Koo had denied that the deal was due to financial troubles. Instead, she said that CXA was doubling down to focus on SaaS after a huge spike in revenue growth from this business.
The layoffs came as a surprise to some, given the booming SaaS unit.
One source was told in a previous town hall meeting that CXA will rely on the Vietnam team to take the SaaS platform global, and that dozens more will be hired in 2021. “But after the layoff of our Singaporean colleagues, the company asked the Vietnam team to cut down the operation cost (mostly related to our Amazon Web Services monthly bills),” the source recalls.
Koo, however, said that since the Singapore sale, CXA has been deliberating where to best support its growing SaaS business, especially since all of the core functionality has been built.
“We decided to locate that in China, where we already have existing business, product, tech, and operations staff in one location to minimize the time lost due to communication gaps,” she adds.
