Start-ups continue layoffs, but at a slightly slower pace

Employees at startup companies have continued to live with the fear of pink slips this fiscal. In FY24, 13,095 employees were laid off from Indian startups. While this is little lower than the record layoffs in FY23, it is way higher that the numbers recorded in good years such as 202122. This is based on the numbers from global layoffs tracker layoffs.fyi

Globally, 50,841 startup employees were laid off in FY24. India accounts for 9 per cent of those. In FY23, 1.6 lakh startup employees lost jobs across the world. At that time, India’s share was just 6 per cent, even though the layoff numbers in the country were higher. In FY21, India accounted for 21 per cent of global startup layoffs.

Layoffs in Q4 FY24 was at 2,055, slightly lower than the preceding two quarters and half of the peak of 5,566 in Q1 FY24. The firing in Q4 was mainly led by ecommerce platform Flipkart. The company laid off 1,100 people in January 2024.

The numbers appear to be lower with the former unicorn Byju’s taking it easy in sending its employees home. The last layoff session in the company happened in June 2023. There are reports that it may lay off more staff members. However, these numbers may not be completely accurate as a lot of layoffs happen silently and some companies do not reveal the exact number of employees they let go of.

A BETTER PAST

Data shows that there have been better times for the startup ecosystem. Case in point, most quarters of FY22, when the layoffs were almost nil. In FY21, during the pandemic, 16,282 Indian startup employees were given the pink slip. In FY22, during the startup boom and the season of unicorn minting, the numbers dropped to 1,090. However, companies started laying off again in FY23, when funding dried up for startups and promoters were forced to cut back on expenses to reduce their losses. A massive 18,572 people were laid off from Indian startups then.

SITUATION BETTER?

Thillai Rajan, Professor, Department of Management Studies, IITMadras, says that startup layoffs may come down further and the ecosystem will stabilise in the coming few months. “Layoffs too happen in cycles in startups. After a period of mass layoffs, the situation is bound to get better,” he said, adding that the job market too may improve in the coming months.

“Another aspect is that a few startups have dominated layoffs in startups,” he said, hinting at the layoffs at Byju’s. “Since these companies have completed their layoffs, the level has returned to the original state,” he added.