It’s now widely accepted that 2023 has been one of the lowest points in recent memory in India’s startup ecosystem, but numbers point out to how dismal the year has really been.
Indian startups have laid off 28,000 employees in the first 9 months of 2023, data from Longhouse Consulting has shown. In comparison, Indian startups had fired 4,080 employees in 2021, and 20,000 employees in 2022. With 28,000 employees laid off in 2023 with three months still to go, 2023 could becoming the worst year for startup employees by a distance.
“The problem may be deeper in startups but we must remember that the overall economy is also being ravaged by high interest rates and inflation, with tech firms getting impacted across the world,” said Anshuman Das, cofounder and chief executive, Longhouse Consulting.
The largest numbers of layoffs came from Byju’s, which fired 2,500 employees, Amazon, which laid off 1,500 employees, and JioMart, which fired 1000 employees. In addition, Dunzo and Sharechat fired 500 employees each.
The layoffs also had second-order impacts. With jobs in short supply, firms were able to moderate on salary raises — hikes for lateral moves across companies at the same position came down from 25-35 percent when funding was abundant, to just 15-20 percent now. Also, hikes within companies came down — Flipkart, for instance, didn’t give any raises to its best-performing 30 percent workforce, including senior employees. With fewer companies hiring, employees were forced to stick around where they were — attrition, which had risen to 35 percent in 2021, came down to 9-14 percent in 2023. And with fewer jobs to go around, the probability of a candidate accepting a job offer went up from 10-40 percent earlier to 50-90 percent in 2023.
These are difficult times, but anyone who’s been observing startups for long enough would know that such a slowdown is a natural part of the startup lifecycle. A similar slowdown had occurred in 2015, when hundreds of startups had shut down, and thousands of startup employees had been fired. India’s startup ecosystem, however, is much bigger in 2023 than it had been in 2015, so the impact of this slowdown is not only more pronounced, but also more widespread. But what could worry the startup ecosystem now is that even several quarters into the funding winter, there are no green shoots emerging — there are no large funding rounds to speak of, and unicorn creation has all but ground to a halt. And this could suggest that while 2023 has been the worst year ever in terms of layoffs for India’s startup ecosystem, there are no signs — yet — that 2024 will be any better.