More than 100 Indian startups have reportedly laid off over 24,000 employees in 2023, according to data shared by market research firm TheKredible. Troubled edtech startup Byju’s, ShareChat, Swiggy, and Unacademy are among the unicorn firms that have let go of the highest number of employees. The layoffs come as startups face scarce funding and pressure from investors to move towards profitability.
In a bid to rein in costs, startups across various segments have resorted to slashing jobs. Funding into startups has also declined significantly, reaching a seven-year low of $8.2 billion in 2023 compared to the $25 billion investments secured by firms in 2022.
Additionally, several small to mid-sized startups shut down operations last year, further contributing to the number of laid-off employees. The data reveals that more than 10 startups ceased operations in 2023. The inability to sustain operations due to a prolonged funding crunch, coupled with regulatory challenges and difficulties in establishing a viable business model, led to the closure of companies such as ZestMoney and FrontRow. ZestMoney was recently acquired by DMI Group in a fire sale deal.
Experts monitoring the startup space believe that automation also played a role in the layoffs. Aditya Narayan Mishra, the CEO of CIEL HR Services, stated, The layoffs have been as a result of the deployment of greater automation in the business, correcting the over-hiring done earlier. Companies are increasingly relying on technology, particularly artificial intelligence, to improve operational efficiency and save costs.
The impact of these layoffs extends beyond the affected individuals and companies involved. As the startup ecosystem plays a crucial role in India’s economic growth, concerns arise regarding the overall health and sustainability of the sector.
Despite the challenges faced, stakeholders continue to emphasize the importance of startups, innovation, and job creation. Efforts are being made to address the funding crunch and regulatory hurdles, seeking to create an enabling environment for startups to thrive and contribute to India’s economic development.
