Indian Startups See Fewer Layoffs in 2024: Signs of Resilience

Indian startups have witnessed fewer job losses in the first half of 2024, offering an optimistic picture of the job market and showcasing their resilience and adaptability in light of evolving economic challenges. This news has brought much-needed relief to both the industry and the government, especially after the record layoffs of 2023.

Let’s examine the factors contributing to fewer layoffs and what the future holds for the job market in startups.

What’s Happening?

A report by Longhouse Consulting states that startups recorded lower job losses in the first half of 2024 compared to the same period last year. Between January and June 2024, startups cut almost 11,250 jobs, far fewer than the 21,000 job reductions in the January-June period of 2023. Even in the second half of 2023 (July-December), the total figure for layoffs in startups was around 15,000.

Companies Engaged in Layoffs

Apart from layoffs, the report also highlighted hiring trends for Indian startups. Compared to 2021-22, hiring levels are still 35-40% lower in the first half of 2024. However, a positive sign is that hiring has picked up pace from the dull year of 2023, when hiring was almost 60-70% lower than the previous fiscal year.

Major companies that have engaged in large-scale layoffs in the first half of 2024 include Ola Electric, Paytm’s parent company One97 Communications, Swiggy, Unacademy, and Flipkart.

Reasons for Low Hiring in the Indian Startup Sector

• Tight Funding Environment: A lack of funding from VC and PE firms is posing a significant challenge for startup growth and hiring.
• Cost Conservation: Companies are focusing more on cutting costs in light of uncertainty and economic challenges.
• IPOs: Many startups are moving towards listing on stock exchanges, focusing on building sustainable business models rather than hiring.
• Regulatory Challenges: Many companies are facing regulatory scrutiny and legal challenges.

What’s Next?

Although this year has also seen some layoffs, they are concentrated in specific sectors, unlike in 2023 when layoffs occurred across the board.

As mentioned in the Economic Times, Sandeep Murthy, a partner at the VC firm Lightbox Ventures, explained the reason for the drastic job cuts. He said that for a long time, startups were primarily concerned with raising capital rather than building a business, which led to extravagant spending. When investors decided to tighten their purse strings, companies opted for mass layoffs. Now, however, the situation has changed, and companies are focused on investing in future growth.

That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!

The companies mentioned in the article are for information purposes only. This is not investment advice. Disclaimer: Teji Mandi Disclaimer