Twenty days into 2023, and at least 20 Indian startups have handed pink slips to employees, in a grim start to the new year which was expected to bring some respite from the tech winter.
While 2021 is remembered as the year of unprecedented funding rounds as Indian startups raised more than $42 billion across 1,583 deals, 2022 is expected to remind us of the time when over 20,484 employees were laid off by around 67 startups, including unicorns BYJU’S, Chargebee, Cars24, LEAD, Ola, OYO, Meesho, MPL, Innovaccer, Udaan, Unacademy, and Vedantu.
Amid a funding crunch in a volatile market led by inflation, the Russia-Ukraine war, and the stock market crash, many startups, both domestic and global, have had to lay off employees to survive. According to a layoff tracker website layoffs.fyi, 763 startups laid off 154,843 employees globally in 2022.
And, companies are continuing to lay off employees in the new year as well, as investors advise startups to cut costs and increase the runway by as much as three years, with several funding rounds being renegotiated, stalled, or canned. A clutch of well-funded companies, including Swiggy, Ola, GoMechanic, and Dunzo, have recently laid off employees to cut costs.
“We will continue to see layoffs in the next 6-9 months and also see highly leveraged companies facing a debt trap and going bust. While layoffs have currently hit service companies and funded startups, especially in fintech, edtech, IT services and financial services markets, over the next few months it will impact many other sectors like healthtech, and e-commerce,” said Atul Thakkar, director at Anand Rathi Investment Banking, to DealStreetAsia.
“We believe that over the next 12-18 months, organisations will focus on profitability over growth even if they get funded, as the overall macro environment may not be conducive, and companies will prefer to be conservative,” Thakkar added.
On Friday, Swiggy laid off 380 employees, citing a slow delivery growth rate. Its CEO Harsha Majety said, “Our overhiring is a case of poor judgment, and I should’ve done better here.”
However, experts believe India is still faring better than its global peers. Over the past few months, a slew of multinational companies, including tech giants Amazon, Meta, Intel, and Twitter and financial behemoths Citi and Morgan Stanley. Globally, around 38,800 employees have been laid off across 133 companies so far this year, according to layoffs.fyi.