India’s start-up ecosystem is stabilising after a turbulent phase in the last 1.5 years.

Layoffs by start-ups, which peaked in 2023 with 16,398 employees laid off across 92 companies, saw a notable decline in 2024, dropping to 8,895 employees laid off from 32 companies, as per data from start-ups layoffs tracker Layoffs.ai.

Due to economic headwinds and shifting consumer behaviours, the job losses in the year were led by start-ups in the finance, retail, and education sector. 3,709 employees lost their jobs in the finance sector, 1,401 in retail, and 1125 layoffs were recorded in education technology firms.

The trend of firing is also mirrored in terms of the overall job creation in the start-up world. As per government’s Start-up India data, the new jobs created by recognised start-ups in 2024 also fell to 1.78 lakh in 2024 compared to 3.9 lakh in 2023.

company cuts

Paytm led the tally with 3,500 layoffs in 2024, followed by Flipkart, which laid off 1,100 employees. Companies like Byju’s, Ola Electric, and Swiggy also announced significant cuts, impacting hundreds of workers.

The start-up hubs of Bengaluru and Noida emerged as the hardest-hit cities, with 4,486 and 3,500 job cuts respectively as they house majority of high-growth start-ups, making them vulnerable to industry fluctuations. Other cities, including Delhi, Chennai, and Gurugram, experienced smaller but notable layoffs with 4.2 per cent, 3.5 per cent, and 1.3 per cent respectively.

Experts insight

Experts attribute the decline in layoffs to a more cautious and profitability-focused approach by start-ups following aggressive expansions during the pandemic. Companies streamlined operations, adapted business models, and prioritised efficiency over rapid scaling, they said.

“Start-ups with strong venture capital backing have thrived, scaling operations, creating jobs, and driving economic innovation. Yet, those struggling to secure early-stage funding or meet heightened investor scrutiny have faced existential challenges, resulting in widespread layoffs and, in some cases, closures,” Ramesh Alluri Reddy, CEO at TeamLease Degree Apprenticeship said.

Siddarth Pai, Founding Partner, 3one4 Capital, & Co-chair, Regulatory Affairs Committee, IVCA, is optimistic about a different 2025. “Layoffs have broadly played out in the market. With renewed investor demand in 2025 on the backs of the 2024 IPO’s, we should see hiring pick up,” he said. However, he expects the trend of right sizing to continue as companies look to IPO, he added.

This trend was also in line with the situation globally. Layoffs by big tech saw a sharp rise in 2023 with 247,822 employees affected across 752 companies before declining significantly in 2024 to 140,795 layoffs across 340 companies.

Others note that while isolated layoffs could persist as companies recalibrate move towards AI-driven operational efficiency, the focus will likely shift to the role of skilling and reskilling for bridging employability gaps and enabling sustainable job creation.

The author is an intern with businessline

Published on December 11, 2024