Indian start-ups fired 9,400 employees in January-March quarter: Here's why
The slowdown that affected the tech sector sometime last year is yet to go away. While the tech giants are showing signs of improvement, start-ups are still in trouble. Indian start-ups are among those trying to find their feet. Per the Economic Times, start-ups in India laid off around 9,400 employees between January and March this year. Let's see what led to this.
Start-up funding fell by 71.6% between January and March
Start-up funding in India has seen a considerable decline over the past year. The funding winter that began sometime last year is yet to loosen its grip on the start-up ecosystem. According to a report by recruitment firm Careernet published by ET, start-ups in the country raised $3.4 billion in the January-March period, down by 71.6% year-over-year. This forced companies to cut down expenses.
About 70% of all start-ups laid off employees
Layoffs have become the chosen method by tech companies to cut costs. Some of India's well-known start-ups, including BYJU'S, Unacademy, Swiggy, Ola, and Polygon, were among firms that laid off employees in the period under review. Around 70% of start-ups in the country fired 100-300 staffers each in the January-March quarter. Edtech start-ups were the worst affected.
Founders and investors think layoffs may continue
Start-ups around the country do not see the current situation improving anytime soon. Many founders and investors believe layoffs may continue. Companies have been forced to adjust to the current macroeconomic environment. Therefore, hiring will be slow even with more funding. This contrasts the approach start-ups took during the pandemic, where they hired new staff in bulk.
Hiring at the senior level fell by around 80%
The slowdown in hiring is visible at the senior level. In the March quarter, start-ups appointed about 80% fewer senior employees compared to the same period last year. The number is much higher in the case of edtech and e-commerce start-ups. Edtech companies saw a 93% dip in senior hiring, while e-commerce platforms witnessed a 90% decline.
The funding situation will not improve soon
The immediate future is not too bright for India's start-up ecosystem. Recessionary fears have forced investors to tighten their purse strings. "The situation will likely not improve in the next two quarters," said Anshuman Das, CEO of Careernet. The cut-down in late-stage funding has severely affected start-up hirings, as they add more employees than early-stage or mid-stage companies.
