Over 4.5k startup employees lose jobs since July

Indian startups have laid off more than 4,500 employees since July last year, data sourced from executive search firm Longhouse showed.

The sudden ban on online real-money gaming which nudged many startups to shut overnight has pushed the numbers up but much of it also has to do with the selective flow of capital into companies and investor pressure to turn profitable. This means leaner teams and focus only on filling up roles that are key to growth.

Besides, with firms increasingly betting on AI and many founders building AI-first startups, the approach by design now is to have smaller headcount. Consider home decor startup Livspace, for instance, which recently sacked 1,000 staff in AI push.

Even early stage startups looking to raise growth funds need to show at least a path to profitability early in the game now, said Anshuman Das, CEO and founder at Longhouse.

“From the start, hence, they are designing the companies very differently. They are not doing big hiring in all functions but only adding incremental hires and senior hiring wherever it is a must,” Das said. Also, as many startups head for IPO, they are cutting costs and trying to turn in a profit, Das said. “Much of the big money in 2024 and 2025 flowed into quick commerce. Sectors such as traditional SaaS are not attracting big money with the AI economy taking over,” said Das.