As the effects of the funding winter continue to ripple through India’s startup ecosystem, many companies are grappling with the need to downsize, leading to a surge in layoffs.
Layoffs Surge in FY24
The current financial year has seen a grim start, with approximately 5,000 individuals losing their jobs, predominantly in the startup sector. Various factors such as the imperative for larger startups to pursue public offerings and regulatory challenges have compelled companies to undertake layoffs.
Notably, Bangalore, India’s tech hub, has borne the brunt of these layoffs, accounting for over half of the total layoffs in FY24. Out of the 23 companies involved in layoffs, 16 are based in Bangalore, according to data from Layoffs.FYI.
Challenges Faced by Decacorns
Even industry giants have not been immune to the layoffs trend. BYJU’s, India’s most valuable startup, announced a significant layoff of 1,000 employees in June. Facing challenges ranging from consumer screen fatigue to financial difficulties, BYJU’s has been streamlining its operations following the acquisition spree of the previous year.
Similarly, Reliance Industries, India’s largest company and retailer, also resorted to layoffs, letting go of 1,000 employees in May. The company, which recently acquired wholesaler Metro Cash & Carry, is restructuring its operations, including the closure of several fulfillment centers.
Other notable layoffs include edtech company Frontrow, media startup Bluepad, logistics startup Euler Motors, and fintech Fampay. Though specific numbers were not disclosed, these layoffs underscore the broader trend of downsizing across various sectors.
Decline in Hiring, Especially in Bangalore
Simultaneously, there has been a notable slowdown in hiring, exacerbated by both economic challenges and technological disruptions. According to the foundit Insights Tracker (fIT), hiring in June witnessed a 7% decline compared to the previous year, with a further 4% decline on a month-on-month basis.
Bangalore, already reeling from layoffs, experienced the sharpest decline in hiring, plummeting by 24% year-on-year. This decline can be attributed to rapid automation, particularly in the IT sector, rendering many jobs redundant.
Other major metropolitan areas such as Delhi/NCR, Mumbai, Pune, and Hyderabad also witnessed significant year-on-year declines in hiring, ranging from 9% to 16%.
Outlook for the Job Market
Sekhar Garisa, CEO of foundit, commented on the current hiring trend, acknowledging the challenges faced by India’s job market. Despite the prevailing difficulties, Garisa anticipates a resurgence in hiring across industries as the economy strengthens. He emphasized the importance of job seekers being adaptable to the evolving labor market dynamics.
