Funding winter looms large over startup sector; triggers layoffs

Startups are a dynamic but equally unstable field. With the threat of funding winter looming large over the Indian startup sector, there is always the possibility of layoffs. Statistics show that in the first six months of this year, as many as 17,000 employees have been handed pink slips by start-up founders.

The latest in the series of layoffs is mobile gaming platform, Mobile Premier League (MPL), which fired 350 people in a flash on Tuesday.

This is just the tip of the iceberg as more than 70 startups have laid off their employees this year. 

The once-bright start-up, Byju's, is going through a lean patch as it recently laid off 1,000 employees.

Other big and so-called unicorn start-ups like Unacdemy, Swiggy, Sharechat, and Meesho have also fired employees in large numbers.

Employees working in startups such as fintech, gaming, EdTech, health tech, logistics tech, and the e-commerce space are at risk of being fired.

Funding Winter

According to PricewaterhouseCoopers India, startup funding in the country fell from $18.3 billion to $3.8 billion in 2023.

One of the main reasons for 80 per cent layoffs in startups was funding winter.

Startup segments faring well 

Amid the gloom of the funding winter for startups, there are certain industries, such as artificial intelligence, electric vehicles, climate tech, deep tech, and space tech, which are shining brightly. 

Where giants stand

Whammy's Global Report said that tech giants like Accenture, Capgemini, and Cognizant also reduced their head count by 5,000 this quarter.

Data shows that hiring fell by 40 per cent not only in startups but also in India's leading IT companies.

The IT industry is also suffering from slow hiring. Five major IT companies in India—TCS, Infosys, HCLTech, Wipro, and Tech Mahindra can hire 50 thousand to 1 lakh people in the year 2023–2024.

In the midst of many layoffs, this may sound like a good news, but last year, the same companies had provided jobs to 250,000 people.

In practicality, these companies can heavily cut down on their new hirings.