Startup layoff crisis in India witnessed a significant decline in the first quarter (Jan-Mar) of 2024 compared to the same period in 2023. There’s a 60% drop in the number of employees laid off. This translates to thousands of jobs saved, offering some relief to the startup ecosystem. Even though Indian tech startups laid off over 2,000 employees in the first quarter of the current calendar year, according to data from layoffs. It’s more than 60% lower than the layoffs announced during the same period last year when venture capital was drying up in a “funding winter.”
Why Startup Layoff Crisis Has Reduced?
Startups might be prioritising long-term sustainability over rapid expansion, leading to a more measured approach to staffing. Companies might be more selective in hiring practices, focusing on specific skills and experience to optimise their workforce. The statistics indicated that in the first quarter of 2023, 43 firms laid off more than 5,358 people, excluding those organisations where the number of employees affected by the layoffs was not mentioned. Byju’s, a troubled edtech startup, was responsible for the most significant number of layoffs last year during Q1, firing 1,500 employees from design, engineering, and manufacturing departments.
Aside from Byju’s, food-tech unicorn Swiggy laid off 380 people as part of a company-wide reorganisation, and social networking site ShareChat, owned by Mohalla Tech, laid off 500 employees, or approximately 20% of its workforce. Ola, MediBuddy, DealShare, MyGate, UpGrad, and Pristyn Care were the organisations that laid off more than 100 people during this period.
Smaller Startups Still Experiencing Higher Layoff Rates
The data might only reflect part of the picture. Smaller startups or those in specific sectors could still be experiencing higher layoff rates. Despite the decrease, the overall number of layoffs might still be significant. It’s still being determined if this trend will continue throughout 2024.
Flipkart, Swiggy Laid off 400 in January
This year, 11 firms laid off staff in the first quarter, including Flipkart, which allegedly fired over 1,100 employees during its annual performance review. In addition to Flipkart, Swiggy laid off 400 people, or approximately 7% of its staff, in January, as did InMobi, Cure.fit, and Pristyn Care. Employment and layoff cycles for new-age firms are determined mainly by fundraising rounds and market capital availability. For example, last year, which marked the end of the funding winter, approximately 16,400 people were laid off from 111 enterprises, while layoffs in 2021, which witnessed a surge in financing, were close to 4,000.
As investment rounds resume this year, at least for early-stage startups, layoffs are projected to be fewer and farther apart.
