Indian startups let go of 28,000 employees in 2023
Over the last two years, the tide indeed turned—from a period of rapid recruitment in 2021, followed by over 20,000 roles eliminated in 2022, and now a continuation of the downsizing trend in 2023.
The year 2023 has not been kind to startups. In an alarming shift from the previous trend of aggressive recruiting, more than 28,000 startup employees found themselves on the receiving end of pink slips within the first nine months. Amidst the chilling “funding winter”, startups are reprioritizing their strategies for financial stability and efficient operations.
Economic Impact & Company Responses
Unfortunately, this problem is not specific to the startup ecosystem; it’s part of a bigger economic issue. Established tech companies, much like their startup counterparts, are wrestling with the repercussions of rising interest rates and unchecked inflation. Such pressures prompted companies to take notable steps; Flipkart held back pay raises for its top-tier employees, whilst smaller competitor Meesho cut loose approximately 250 members of its workforce in May alone.
The edtech powerhouse Byju’s also joined the trend, relieving close to 2,500 employees in October. Additional edtech firms, along with multiple e-commerce platforms, performed significant workforce reductions. Yet, the distributed impact of these layoffs is unsurprisingly unequal. Edtech, real money gaming, and B2B e-commerce startups are witnessing the most reductions. Meanwhile, fintech and deep-tech sectors continue to stand relatively protected from this financial storm.
Hiring Has Slowed But Not Stopped
As stark as these numbers may appear, the startup world is not entirely grim. True, hiring has slowed compared to previous years, but it hasn’t stopped. In a show of resilience, startups like PhonePe, Paytm, PolicyBazaar, Ola, and Zepto have each onboarded over 500 new team members, signaling that the startup sector, whilst contracting, remains active.
Over the last two years, the tide indeed turned—from a period of rapid recruitment in 2021, followed by over 20,000 roles eliminated in 2022, and now a continuation of the downsizing trend in 2023. While the digital startups of Udaan, PhysicsWallah, Bizongo, and Third Wave Coffee reduced their headcounts this year, they and others are figuring out how to handle this tough situation.
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