From Tech To Start-Ups, Understanding The Layoffs That Shook The Indian Workforce

2023 was an interesting year for Indian investors as the stock market saw an impressive lineup of initial public offerings (IPOs), making new records for India’s start-up sector. However, the same period also drew a different picture of India’s employment landscape. From the IT sector to edtech to start-ups, several industry players conducted layoffs citing global headwinds and the funding winter among the major reasons behind these decisions. 

Tech Industry

Several media reports suggest that till early December 2023, the tech industry has seen nearly 2,40,000 job cuts, marking a growth of 50 per cent over the layoffs seen a year earlier in 2022. Citing data from layoff.fyi, a website dedicated to tracking job cuts in the tech industry, shows that as of October 13, 2023, about 1,059 tech companies have let go of 240,193 employees globally, in the year so far. Comparatively, in 2022, 1,061 tech companies fired 164,769 employees, coming up to an average of 555 employees losing their jobs every day over the last two years or 23 workers losing employment every hour, reported India Today, quoting the data. In September itself, more than 4,500 tech employees lost their jobs owing to economic slowdown and new planning. Retail tech and consumer tech seem to have been hit the hardest in 2023, with both sectors seeing around 30,000 employees let go off each.

Big Tech names like Amazon, Yahoo, and Google along with others like Spotify and LinkedIn have been on a layoff spree in the year citing cost restructuring and strategic realignment as the major factors behind the decision. 

E-commerce giant Amazon laid off close to 18,000 employees in 2023, with job cuts in the firm’s music division and Alexa business. Alphabet Inc-owned Google laid off employees part of its Users & Products team recently, calling it minor, however, the layoffs are part of the larger downsizing trend being followed at the parent company’s subsidiaries like Waymo, Verily, and Google News. 

Further, Spotify also announced early in December that it intends to lay off 17 per cent of its workforce to reduce costs. The firm first let go of 200 employees in June after firing 600 employees earlier in January. Yahoo also intends to stick to its plan to reduce its workforce by around 20 per cent by the end of the year. This decision was made as part of the firm’s comprehensive restructuring initiative undertaken earlier in the year. Microsoft-owned LinkedIn also announced in October that it plans to layoff 668 employees as part of the firm’s efforts to streamline its operations.  

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Start-up Sector

In India, the start-up sector saw about 11,000 employees lose their jobs in the first half of 2023, about 40 per cent more than the layoffs in the sector reported in the same period a year earlier. Byju’s, one of India’s major edtech start-ups, laid off nearly 5,000 employees as part of business restructuring exercises around October 2023. Notably, between the October 2022 – June 2023 period, the firm fired at least 5,000 individuals. Earlier, the company let go off people from the two start-ups it had acquired, namely Whitehat Jr and Toppr, reported Hindu Business Line.

Apart from Byju’s, several start-ups have laid off employees in a mass firing spree. More than 70 Indian tech start-ups let go of over 21,000 employees. These included unicorns like OYO, Meesho, Byju’s, Ola, Udaan, Unacademy, Vedantu, and Cars24, among others. 

Additionally, gaming companies like Ascendant Studios, Beamdog, Naughty Dog, Niantic, Keywords, Crystal Dynamics, and Team 17, among others, also indulged in mass layoffs in recent months. Till July 2023, about 22 edtech start-ups fired around 10,000 employees, the report stated.

Others

In addition to these sectors, the retail sector, including e-commerce, also saw massive job cuts in the last two years. More than 3,400 employees were fired from companies like Meesho, Mamaearth, Flipkart, Udaan, Dukaan, and Myntra among others. 

According to a report by Mint, data reported by aggregators underrepresents the actual layoffs that took place in India. The report quotes tech-focused hiring firm TopHire and states that about 100,000 employees have been fired in India in the last two years and this number is much higher than the publicly reported numbers. According to the data from layoffs.fyi, only 27,850 employees have been laid off in India since September 2021, however, the report states that this number represents merely one-third of the statistic reported by TopHire. The report underlined that the difference in figures arose due to silent or hidden layoffs and forced resignations. 

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Why Are The Layoffs Happening?

However, what has led to this trend of layoffs? Multiple factors are at play here that explain why companies have resorted to downsizing in the last two years. One such factor is the funding winter being experienced during the current year. According to data from market intelligence firm, Tracxn, Indian start-ups managed to collect only $5.48 billion in funding in the first half of 2023, displaying a major decline from the $19.5 billion raised during the same period a year earlier. During the first six months of the year, no new unicorn emerged in India as a result of the dip in startup funding seen during the period. This challenge in securing funding has posed the obstacle of financial security for many start-ups. As such, founders have resorted to slashing the workforce as a means of cost-cutting measures to make up for the lack of funding available in the economy. 

Ever since the beginning of the funding winter in 2022, about 34,785 employees have been fired by 121 Indian start-ups till early December 2023, data from Inc42 revealed. According to the company’s Indian Tech Start-up Funding Report Q3 2023, the start-ups in the country managed to raise $7.1 billion in the first nine months of 2023, plunging 68 per cent against $22 billion raised during the corresponding period a year earlier. 

Further, the tech industry is being plagued by a dampened growth in revenue amid an economic slowdown at the global level. This slowdown has been attributed to factors like the Russia-Ukraine conflict and inflationary pressures, impacting the economy and profitability, and forcing corporates to undertake cost-cutting measures. Also, technological advancements, evolving consumer choices, and a perpetual need for operational efficiency play a major part in impacting the changes in the workforce.