Jobs in Indian start-up bleeding

The job market in the Indian startup ecosystem is bleeding. It is credited to the continued issue of funding winter has forced Indian startups to leave thousands of employees out in the cold.

Despite being the fastest-growing economy in the ongoing financial year, India’s economy faces considerable risks this year and will slow down considerably. India’s domestic growth prospects remain robust, but economists feel that there is no escaping the cascading impact of the global economic slowdown, which could hurt various key segments growth.

A report states, in the first half of 2023, about 70 startups have laid off more than 17,000 employees as per data sourced from recruitment and staffing firm CIEL HR. Startups, which typically depend on external investments for growth, downsized after a slump in investor funding forced them to cut costs and conserve cash.

This is not to say that there is dearth of capital in the ecosystem-India focused funds are sitting on an unallocated capital of an estimated $18 billion, as per the analysts. However, the flow of capital into startups has become selective amid the economic downturn and investors are writing cheques only for companies that are demonstrating a path to profitability. The IT industry hiring continued to remain an area of concern, with a 46% decline in new jobs created compared to July last year, it said.

Besides IT, FMCG, retail, BPO, insurance, and education sectors showed cautious hiring sentiments with a 16-23% decline in new job creation compared to July last year. There are Sectors focused on the domestic economy, such as oil and gas and real estate, continued to hire aggressively. This reflected a resilience in the domestic economy. Meanwhile, new job openings in AI-related fields stayed flat around 31,780 compared to 32,205 in June.

This is a significant number, and it is indicative of the challenges that Indian startups are facing. There are a number of factors that have contributed to the current state of the Indian startup job market.

While the current scheme of things has prompted many marquee investors to instruct their portfolio startups to cut costs and increase runways, many founders seem to have caused a bloodbath in the job market in the name of undertaking cost-cutting measures.

Edtech has seen the most layoffs, followed by consumer services and ecommerce. The three sectors have collectively seen 50 startups laying off 20,469 employees since last year.

Now, halfway through 2023, funding in the world’s third-largest startup ecosystem has further faded significantly. According to Inc42’s Indian Tech Startup Funding Report H1 2023, Indian startups raised $5.4 Billion in the first six months of 2023, down 72% compared to approximately $19 Billion raised during the corresponding period last year.

S Mohini Ratna, Editor, VARINDIA