100,000 startup workers may have lost jobs in past 2 years

In the past 24 months alone, more than 1,400 companies have handed out pink slips to around 91,000 employees.

Factoring in concealed lay-offs, an indirect way of reducing the headcount, the figure may have touched 120,000, data from tech-focused hiring firm TopHire shows.

Prominent firms, including unicorns or startups valued at $1 billion or more such as Byju’s, Unacademy, Blinkit, Meesho, Vedantu, Oyo, Ola, Cars24, and Udaan downsized their teams.

While reported lay-offs from publicly available data are at 25,000-28,000, this only offers a partial view considering the reported numbers don’t capture the entire picture.

This is because the liquidity crisis led to funding constraints, compelling several startups in India to adopt austerity measures and trim monthly expenses.

With fresh funding becoming scarce, startups were forced to cut marketing expenses, realign cost structures and reduce employee costs.

According to a report by PwC India, Indian startups secured $3.8 billion in funding in the first half of 2023, down 36% from a year earlier, marking the lowest fundraising over a six-month period in the past four years.

Meanwhile, financial-technology, software-as- a-service (SaaS) and direct-to-consumer companies continued to be the most funded startups in 2023 first half.

The PwC data showed that startup fundraising was at $3.8 billion across 298 deals between January and June 2023, sharply lower than $5.9 billion in the year-ago period, Mint reported last month.

Startups have let go at least twice the reported numbers, including contract employees who lost their jobs, said Shiv Agrawal, managing director, ABC Consultants.

Consultants and contract employees, who comprise a large part of the startup workforce, are often not mapped during these lay-off drives.

For instance, recently, media reports said a fintech by a second-time founder laid off 250-400 employees, but people with direct knowledge of the development said it was in fact at 750, underscoring the amount of underreporting among startups when it comes to retrenchment numbers.

According to staffing firms, lay-offs at technology startups during 2022 and 2023 have impacted about 1% of information technology professionals under direct employment.

Considering that agritech, logitech fintech, edtech and D2C account for nearly 70% of lay-offs, the impact on indirect employment could be massive.

To be sure, the ecosystem has also seen headcount addition in the same period has been around 2.12 lakh, although a large part of it was in FY 22 which was driven by the funding frenzy.

Things slowed down in FY 23 which saw hiring of around 1.05 lakh and in the first quarter of the current fiscal it stands at 12,000, data from Xpheno shows.