Indian startups lays off massive 9,400 workers as funding drops by 71.6%

Funding Decline and Expense Reduction

Over the past year, there has been a significant decrease in funding for startups in India. According to a report by recruitment firm Careernet published by ET, Indian startups saw the worst decline in overall fundraising amount. The report said Indian startups could raise only $3.4 billion in the January-March period, down by 71.6% year-over-year.

This decline in funding has forced companies to reduce expenses, leading to layoffs as the preferred method of cutting costs.

Layoffs Across the Industry

Layoffs have become the chosen method for many tech companies to cut costs. During the January-March quarter, several prominent Indian start-ups such as BYJU'S, Unacademy, Swiggy, Ola, and Polygon resorted to employee layoffs. The majority of start-ups, about 70%, let go of 100-300 employees each during this period. Edtech start-ups were the worst affected.

Future Outlook: Bleak and Uncertain

According to the belief of numerous founders and investors, start-ups in India are not optimistic about the current situation and foresee a continuation of layoffs. Companies have been forced to adjust to the current macroeconomic environment, leading to a slowdown in hiring, especially at the senior level. Start-ups hired 80% fewer senior employees in the March quarter of this year compared to the same period in the previous year.

Impact on Edtech and E-commerce

This trend is most visible in the edtech and e-commerce sectors, with edtech companies experiencing a 93% dip in senior hiring and e-commerce platforms seeing a 90% decline. This is alarming as late-stage funding has severely affected start-up hirings, as these companies tend to add more employees than early-stage or mid-stage ones.

Looking Ahead: Finding New Ways to Grow and Innovate

The immediate future does not look too bright for the Indian start-up ecosystem as recessionary fears have forced investors to tighten their purse strings. Anshuman Das, CEO of Careernet, said that "the situation will likely not improve in the next two quarters."The recent news is worrying for the start-up industry in India, which has been facing challenges and difficulties in establishing a stable and successful foothold in the market for some time. The decline in funding and slowdown in hiring are clear signs that the industry needs to find new ways to grow and innovate.

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