Indian Tech Startup Layoffs Increase This Week, But Drop by 60% in Q1

The tech industry has witnessed a surge in layoffs this week as major companies execute workforce reductions across various departments. Among the prominent names making headlines for employee terminations are Amazon, Apple, and Byju’s, all citing strategic shifts and downsizing as the driving forces behind the job cuts.

Layoffs Surge in 2024

According to data compiled by Layoffs.fyi, the tech sector has seen a significant uptick in layoffs in 2024. As of January, 235 companies have laid off a staggering 57,785 employees. This trend continued into February, with 74 companies cutting 15,379 jobs.

Byju’s Restructuring Continues

Byju’s, an embattled edtech company, has announced plans to lay off approximately 500 employees, constituting nearly 3 percent of its total workforce of around 15,000. The move comes as Byju’s grapples with a reported funding crisis and a markdown in its valuation. In 2023, the company underwent a significant restructuring, resulting in the termination of about 4,500 employees.

Indian Tech Startups Witness Decline in Layoffs

Despite the overall increase in layoffs within the tech industry, Indian technology startups have experienced a decline in terminations during the first quarter of the calendar year. According to data from a tracking website layoffs.fyi, more than 2,000 workers were laid off, marking a 60 percent decrease compared to the same period last year.

Venture Capital Reductions Impact Layoff Trends

The decline in layoffs among Indian tech startups coincides with a reduction in venture capital funding. Data indicates that during the first quarter of 2023, 43 companies laid off 5,358 employees, with Byju’s leading the pack with 1,500 terminations across various teams.

Prominent Layoffs in Q1 2024

Several notable companies have conducted layoffs in the first quarter of 2024. Foodtech unicorn Swiggy laid off 380 employees as part of a company-wide restructuring, while social media platform ShareChat terminated 500 employees, amounting to nearly 20 percent of its workforce. Other companies including Ola, MediBuddy, DealShare, MyGate, UpGrad, and Pristyn Care also initiated layoffs affecting more than 100 employees each. 

Funding Cycles Influence Workforce Dynamics

For many new-age startups, the ebb and flow of hiring and layoffs are closely tied to funding rounds and the availability of capital in the market. In 2021, a surge in funding led to fewer layoffs, while a funding winter in 2020 resulted in a significant uptick in terminations.

Outlook for 2024

As funding rounds normalize in 2024, particularly for early-stage companies, the frequency and magnitude of layoffs are expected to decrease. Recent funding data from Tracxn Technologies reveals a rise of 28 percent in early-stage rounds during the first quarter, indicating a positive outlook for the industry moving forward. However, seed-stage and late-stage rounds saw declines of 7 percent and 46 percent, respectively, compared to the same period last year.

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