Tech startups’ layoff dropped 60% in Jan-March- Report
The layoffs dropping happened at a time when venture capital reduced, according to layoffs.fyi. Data showed that during the first quarter of 2023, as many as 43 companies laid off 5,358 employees. Edtech firm Byju’s had the largest chunk, firing 1,500 employees across design, engineering and production teams.
Large to small IT enterprises cut up to 50% of their workforces worldwide in 2023. With an uncertain decline in the demand for and profit margin from IT services, there will be tech job cutbacks beginning in 2022.
Since 2022, companies such as Google, Microsoft, and Salesforce have reduced their workforce in an effort to become more sustainable and competitive in a global market. In contrast, Indian startups and IT companies demonstrated consistency in 2022 and 2023 and so on. But in 2024, the first quarter saw a sharp decline in the number of layoffs in Indian IT organizations.
A tracking website states that although more than 2,000 employees were let go by Indian tech firms in the first quarter of this year, that number is 60% lower than it was at the same time the previous year.
The layoffs dropping happened at a time when venture capital reduced, according to layoffs.fyi. Data showed that during the first quarter of 2023, as many as 43 companies laid off 5,358 employees. Edtech firm Byju’s had the largest chunk, firing 1,500 employees across design, engineering and production teams.
However, foodtech unicorn Swiggy lay off 380 employees in a company-wide restructure, while social media startup ShareChat laid off 500 employees, or over 20% of its workforce. Ola, MediBuddy, DealShare, MyGate, UpGrad, and Pristyn Care all laid off over 100 staff.
This year, at least 11 firms, including Flipkart, lay off staff in the first quarter. During its yearly performance assessments, the e-commerce company laid off approximately 1,100 employees. Swiggy, an online food delivery startup, lay off 400 employees, or over 7% of its workforce, in January. The list also included companies like InMobi, Cure.fit, and Pristyn Care.
For new-age firms, hiring and layoff cycles are connected to funding rounds and market capital availability. Last year, in the height of a funding winter, almost 16,400 people were laid off from 111 enterprises, while layoffs totaled nearly 4,000 in 2021, a year highlighted by an increase in funding.
As investment and start-up funding rounds resume this year, at least for early-stage startups, layoffs are projected to be fewer and further apart.
As the startup, hiring and firing practices often mirror the state of funding and general market liquidity. A funding scarcity the year before resulted in 111 enterprises laying off almost 16,400 workers.
On the other hand, the report states that in 2021—a year distinguished by increased funding—layoffs significantly declined to a level of over 4,000.
This year, with funding rounds getting back to normal, especially for early-stage startups, layoffs are anticipated to decrease and the time between them to increase.
According to recent data from Tracxn Technologies, a capital market intelligence company quoted by Business Standard, early-stage funding increased by 28% in the first quarter. But compared to the same time last year, financing for the seed and late stages fell by 7% and 46%, respectively.
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