From January To March, Indian Startups Fired 9,400 Workers
Businesses across the world have been affected by the COVID-19 pandemic, including in India.
From January To March, Indian Startups Fired 9,400 Workers
Many startups and giant corporations have been negatively impacted, with many failing to secure funding and maintain their workforces. Many Indian startups have been forced to lay off employees because of a lack of funding.
There has been a recent report that sheds light on the scope of the problem. In February and March this year, at least 9,400 employees were laid off due to a lack of funding for startups. There are many well-known Indian startups affected by this, including Byju’s, Unacademy, Sharechat, MyGate, and GoMechanic.
Approximately 70% of startups have cut their workforce by 100 to 300 this quarter. There are other impacts of the funding crunch as well as layoffs. In addition, companies have reduced hiring new employees, with Careernet reporting that startups have reduced hiring senior positions by up to 80% compared to last year.
This position typically entails a salary package exceeding Rs 50 lakh per year. These startups will likely slow down hiring in the coming days, according to Anshuman Das, Co-Founder and CEO of Careernet. Laid-off employees and slow hiring are both caused by a lack of funding.
According to experts, there has been a significant decline in startup funding in India this year. Compared to 2020, startups raised $12.1 billion this year, down from $12 billion in 2020. Big investors need help investing in startups due to the market situation.
It is becoming increasingly common for startups to lay off employees and reduce salary increases to reduce expenses. Despite the pandemic, the funding crunch has hit the Indian startup ecosystem hard. Due to layoffs and a hiring halt, there will be significant impacts on the livelihoods of thousands of employees and job seekers.
In order to support the startup ecosystem, the government and investors will have to take action now and in the future. In addition, senior hiring dropped 80 per cent in the March quarter compared to last year’s period, even as layoffs continued.
Several sectors were seen to follow this trend, such as fintech, e-commerce, educational technology, SaaS, and healthcare. There were significant reductions in hiring for both e-commerce and tech companies in the March quarter. According to the report, tech startups have laid off the most prominent numbers – over 1,000 employees at a time.
Fresh hires were analyzed according to the report based on annual salary packages exceeding Rs 50 lakh for senior positions. It was reported last month that hiring for senior leadership roles at new-age tech firms had plunged by 60-80 per cent over the past year.
Founders And Investors
Slowdowns started sometime last year in the tech sector and are still present. Though the big tech companies are showing signs of improvement, startups remain in trouble. There has been a considerable decline in startup funding in India over the past year.
Even though the funding winter began sometime last year, the startup ecosystem still feels its effects. The ET found that startups in the country raised $3.4 billion in the January-March period, a drop of 71.6% from the same period last year.
Cost-cutting measures were taken as a result. As tech companies seek to cut costs, layoffs have become preferred. The period under review saw several well-known startup firms lay off employees, including BYJU, Unacademy, Swiggy, Ola, and Polygon.
Between January and March of this year, 70% of startups in the country laid off 100-300 employees. The tech startup sector was the most badly affected. Many startups feel the situation won’t improve anytime soon.
It is believed that layoffs will continue for some time to come by many investors and founders. Companies have had to adapt to changing conditions in the current macroeconomic environment. As a result, even with more funding, hiring will take a lot of work. When the pandemic hit, startups hired thousands of new employees on a mass scale.
Those at the senior level have noticed a slowdown in hiring. In the March quarter, startups hired 80% fewer senior staff than one year ago. A much higher number of startups are involved in e-commerce and tech. There was a 93% drop in senior hiring at tech companies while a 90% decline in software development at e-commerce platforms.
There are few bright prospects for India’s startup ecosystem in the near term. There has been a tightening of purse strings caused by recessionary fears. Anshuman Das, CEO of Careernet, said the situation would likely remain the same in the next two quarters.
In recent years, the reduction in late-stage funding has severely impacted startup hiring, which is a more significant problem than the early-stage or midstage funding reduction.
