Over 4.5k startup employees lose jobs since July

MUMBAI: Indian startups have laid off more than 4,500 employees since July last year, data sourced from executive search firm Longhouse Consulting showed.

The sudden ban on online real-money gaming which nudged many startups to shut overnight has pushed the numbers up but much of it also has to do with the selective flow of capital into companies and investor pressure to turn profitable. This means leaner teams and focus only on filling up roles that are key to growth.

Besides, with firms increasingly betting on AI and many founders building AI-first startups, the approach by design now is to have smaller headcount. Consider home decor startup Livspace, for instance, which recently sacked 1,000 staff in AI push.

“Investors are now rewarding startups that can achieve significant milestones with optimised headcounts. By building lean, startups are not just reacting to tighter funding environment; they are de-risking their models against macroeconomic volatility. This lean by design approach allows for longer runways,” said Viswanath PS, MD & CEO at Randstad India. Even early stage startups looking to raise growth funds need to show at least a path to profitability early in the game now, said Anshuman Das, CEO and founder at Longhouse.

“From the start, hence, they are designing the companies very differently. They are not doing big hiring in all functions but only adding incremental hires and senior hiring wherever it is a must,” Das said. Also, as many startups head for IPO, they are cutting costs and trying to turn in a profit, Das said. “Much of the big money in 2024 and 2025 flowed into quick commerce. Sectors such as traditional SaaS are not attracting big money with the AI economy taking over,” said Das.

Real-money gaming startups aside, companies including Porter, Zepto, Krutrim and Zupee have also sacked people during the period, the data showed. “There are some targeted corrections, especially in roles that were over-hired during the boom phase. Every hire has to justify itself. If not, the position is reconsidered. Hiring is definitely more selective and strategic,” said Aditya Narayan Mishra, MD & CEO at CIEL HR.

The pace of layoffs, though, has moderated in recent times and even as entry-level hiring remains cautious, demand for specialists with 4-10 years of experience has grown. Green-tech and AI-first ventures will lead job creation, said Viswanath, adding that as companies look to optimise operational costs, many jobs will move to tier two hubs. Traction will also be seen in hiring for remote tech roles by overseas startups, said Das.

Ready to Make a Smarter Property Decision? Build Your Legacy with TOI Homes.