Hard times at Softcom?

Layoffs and salary delays at the IT company behind Eyowo

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Hard times at Softcom?

In a January 7 newsletter titled “If you won’t pay me, tell me nicely,” I talked about the importance of communication at startups. In that newsletter, I argued that the best places to work communicate during good times, and are even more open in bad times. I made the argument after several sources shared stories of the non-payment of December salaries by a startup operating out of Lagos. Here’s what I wrote at the time:

“Word on the grapevine, which has now been confirmed, was that one prominent startup didn’t pay employees their December salaries. While the occasional delayed salary payment sometimes happens when you work at a tech startup, the reaction of your employees comes down to how these things are communicated. And in this case, the communication and the timing couldn’t have been worse. The company didn’t break the news to employees until December 25, shattering the plans of many and leaving despair in their hearts. Even worse, the communication was via email, not a physical meeting or at least a Zoom meeting that would have allowed for a more humane disclosure of such painful development. Although the company later paid part salaries to some employees by December 31, at least 40% are yet to receive any payment at all.”

At the time, I did not disclose the name of the startup. My thinking was that these salary delays were one-off events that growing startups have to deal with; I also figured that the broader point was to push companies to communicate. But this week, three sources who asked to be kept anonymous for fear of reprisals, spoke about persistent salary delays at Softcom, the IT services company that powers Eyowo. 

One source told me that the delays started in December 2021. While employees expected their salaries last year, they got an email telling them about the delayed payment on Christmas day. Eventually, some members of staff were paid in part before the end of December, but some people I spoke to did not get their December salaries until the second week in January. 

Other sources told me that the delays were tied to some difficulties in raising money from investors and other delays in the company’s receiving monies for work done from clients. By February, those problems seemed to have been solved, and sources told me that for much of the year, salaries were paid on time. There have now been new reports of more delays which began in Q4 and have now culminated in layoffs. 

Restructuring leads to layoffs 

Last week, several sources told me that restructuring within the company led to some layoffs. Two sources told me that at least 20 members of staff were laid off, representing around 10% of the company’s headcount–LinkedIn puts Softcom’s headcount at 144, but sources say the current number is a little over 200. 

What preceded the layoffs were delays in salary payments. At the time of this report, two sources confirmed that Softcom has not paid its employees their November salaries, and that management has not spoken to them about it. “We received an email this week about a meeting with the CEO, but that didn’t happen, and no one said anything. We’re expected to keep coming to the office and acting like nothing is happening,” one source told me. 

Another source said that it remains unclear when the delays will be addressed and that among the employees, there’s a feeling of uncertainty about their December salaries and allowances. I reached out to Softcom on Tuesday in the hopes that they could provide some context around the allegations of salary delays and slashes, but they did not share any response at the time of this email.

* This is a developing story

What I’ve been reading

This really short piece on the gift of time

It’s not every day you find an investigative piece this thoroughly done, but this Reuters piece on the Nigerian Army conducting thousands of abortions on women fleeing Boko Haram is something.

The Nigerian Army has also been accused of killing at least 60 children in yet another harrowing investigative work by Reuters.

See you on Friday!