Indian startup layoffs: Amid all the gloom, there is a silver lining

The funding winter has given startups a reality check. With fresh capital infusions drying up, companies are forced to optimise the resources at hand, leading to layoffs. Startup employees across the world have found it to be an unusually challenging time as many companies have reduced employee strength in recent months. Consumer demand slowed after the COVID-19 pandemic, and uncertain macroeconomic conditions triggered mass layoffs across major companies around the world. Even big companies such as Meta, Amazon, and Microsoft have made massive job cuts recently.

Indian startups have also faced the same challenge as they have struggled to raise funds. According to the data from the layoff tracking site Layoffs.fyi, more than 10,000 employees have been laid off by around 60 Indian startups since January 2023. On the other hand, the year has been even tougher for tech employees, as around 695 companies have laid off around 1,98,000 employees so far. In 2022, 1,000 tech companies laid off 1,61,000 employees in India. This means almost 23 per cent more layoffs happened this year in a short span of five months.

When talking about how layoffs are now becoming more frequent, 35 North Ventures' founder and CEO, Milan Sharma, said, "It’s easier for companies to lay off as investors have taken a different approach. Investors now talk about profitability, so the layoff scenario is no longer taboo. For companies, it’s more of a question of survival than chasing growth, so they are laying off employees."

"The rest of 2023 will see reasonable layoffs as companies will be forced to work on limited funding, and every dollar will have to be used judiciously and optimised. Almost every VC is now talking about profitability and margins rather than chasing growth numbers. In the new state of things, there is tremendous pressure on companies to perform, so layoffs are here to stay until the overall global economic scenario stabilises," Sharma added.

In January 2023, Indian companies raised $1.18 billion, down 75 per cent from the same time previous year, according to Tracxn statistics, continuing the year's slow pace of startup funding.

Here is a list of Indian startups that have laid off employees recently:

Reflecting on this trend, Aditya Malik, founder of ValueMatrix.ai, said, "Macroeconomic situations, the dollar liquidity squeeze, stress on profitability, and pay parity correction all come together in a circular domino effect and cause mutual impact on each other. This adverse impact tends to augment each time any of them shift even the slightest."

"On the brighter side of things, we can witness a few of the industries, such as fintech and others, which are pillared by AI and AI-enabled tech infrastructure, lifting themselves up. Hopefully, these will end up creating a reverse domino effect, as we are seeing in the AI talent. This, compounded with the easing of edtech and some other impact industries causing major points of restructuring, can be expected to restore stability. It can also give way for learning and strategising to prevent failures going forward," Malik further added.