New-economy companies in India have laid off over 28,000 employees in the first three quarters of 2023. These layoffsare a result of major restructuring by startups to conserve cash and prioritize essential operations. The data, shared with ET by Longhouse Consulting, reveals that startups have been significantly affected this year compared to the aggressive hiring seen in 2021.In 2022, these companies fired more than 20,000 employees, and in 2021, they let go of 4,080 employees.
Although the data from Longhouse covers the January-September period, the following three months also witnessed significant layoffs by companies like Udaan, PhysicWallah, Bizongo, and Third Wave Coffee.
The impact of layoffs extends beyond startups and is reflective of the overall economic challenges caused by high interest rates and inflation, notes Anshuman Das, co-founder and CEO of Longhouse Consulting, adding that tech firms worldwide have been affected.
The sectors hit hardest by these layoffs are edtech, real money gaming, and business-to-business ecommerce. Meanwhile, fintech and deep tech sectors have fared relatively better. Even well-funded ecommerce companies like Flipkart have taken a cautious approach to hiring and appraisals. For example, Flipkart did not provide salary increments to its top 30% employees, including senior leadership, this year. Meesho, a smaller rival, fired approximately 250 employees in May.

Byju’s, the edtech giant, has laid off around 2,500 employees as of October 2023. According to an earlier report in the financial daily in September, the company initiated a round of job cuts that would impact an additional 4,500 people to reduce costs. PhysicsWallah and Adda247, both edtech firms, have also laid off employees.
In the ecommerce space, Udaan fired about 120 employees, while Dukaan, a platform digitizing small stores, let go of 90% of its customer support staff. Dealshare, an ecommerce company focused on tier-2 and beyond markets, cut approximately 130 jobs in September as it closed its B2B vertical.

The layoffs have created a sense of job insecurity in the ecosystem. Despite salary revisions being the worst in three years, attrition rates have gone to 9-14% in 2023, according to Longhouse data. Yashna Ray, a partner at HR advisory firm Metamorph, explained that hikes and lateral movements across companies have normalized due to reduced incentives for employees to switch firms.
In 2021, attrition rates were between 32% and 35%, driven by record levels of startup funding. This improved to 23-26% in 2022 as the funding winter began. Hike ranges also decreased from 25-75% in 2021 to 10-50% in 2022.
Layoffs in startups initially target non-core roles such as marketing, sales, human resources, and operations. However, this year, core roles in tech, product, and finance teams have also been affected.
Read From ET | Layoffs at startups
Despite the challenges, some hiring has continued in the startup ecosystem. As of October 2023, approximately 122,000 people have been hired, with companies like PhonePe, Paytm, PolicyBazaar, Ola, and Zepto recruiting over 500 new employees each.