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At least 8,000 persons have been laid off by 32 companies across India till August this year, according to layoffs.fyi, a real-time layoff tracker. Most of these companies are startups falling in the Information Technology (IT) sector. The maximum number of layoffs this year came from Paytm, which reportedly let go of at least 3,500 employees in June.
Across the world, over 1.30 lakh layoffs have taken place this year alone, including major ones among the Big Tech. On 1 August, Intel let go of 15,000 employees – which is equal to 15 percent of its workforce – in an attempt “to deliver $10 billion in cost savings in 2025.”
Even as layoffs continue in the tech sector, overall hiring is witnessing a downward trend. According to Naukri Jobspeak June 2024 report, white collar hiring has witnessed a decline of 8 percent as compared to last year. The Jobspeak report calculates and records month-on-month hiring activity based on the job listings on the portal Naukri.com.
Why are companies laying off employees? Do tech layoffs abroad have an impact on India? And is low hiring a worrying trend? We ask experts:
32 Companies Lay Off At Least 8,000 Employees
Of the 32 companies that have laid off employees, 20 are Bengaluru-based startups and include popular names such as Unacademy, Byju’s, Ola, Licious, Swiggy, Simpl and Cult.fit.
“The reason for these layoffs is pure cost-cutting,” said Saubhik Bhattacharya, General Secretary of All India IT and ITeS Employees' Union (AIITEU).
Edtech Sector
Last month, Bengaluru-based Unacademy laid off 250 employees. The startup has been cutting costs for over two years and has let go of at least 2,000 employees since 2022, according to a report in TechCrunch. Recently, Unacademy’s CEO was in the news, as he announced that remaining employees won’t be getting any appraisals this year while donning a $400-Burberry T-shirt.
The edtech sector registered record growth during the pandemic, when school learning had shifted to online mode during the pandemic. However, after schools reopened, startups in the sector have been struggling. Following this trend is Byju’s, once India’s most-valued startup.
Meanwhile, upskilling and job search platform Bluelearn shut operations in July. According to their LinkedIn page, the Bengaluru-based startup had up to 50 employees. As per Naukri Jobspeak June 2024 report, hiring in the education sector has also witnessed a decline of 9 percent as compared to the last year.
Media Sector
Social media company ShareChat – which includes the ShareChat app and the Moj app – laid of 30 employees earlier this month even as the company raised $16 million from Singapore-based EDBI in its latest debt round.
In an email response to The Quint, the company spokesperson said:
“These were performance-linked exits. We do mid-year performance evaluations every year in July-Aug and bottom performers are put on an improvement plan or asked to leave. This is a usual practice and accounts for less than 5% of our workforce. We have several open positions, and we continue looking for high-quality talent across functions.”
Meanwhile, microblogging startup Koo, which had positioned itself as a competitor to Elon Musk’s X (formerly Twitter), shut operations in July after acquisition talks with Dailyhunt failed. As per a report in The Hindu Businessline, Koo had 260 employees as of April 2023 and 60-70 as of April this year.
Audio-streaming platform PocketFM reportedly laid off around 200 writers even as it raised a funding of $103 million (over Rs 860 crore) in March this year.
"It may have been an implicit condition to bring down operational costs as these startups picked up fresh funding from investors," said Dheeraj Singh, IIT Kanpur alumnus and Founder of Global IIT Alumni Support Group.
Meanwhile, Bhattacharya opined that it was never in the startups' agenda to have long-term employer-employee relationships. "Their objective was always to make money,” he claimed.
Fintech
Paytm laid off 3,500 employees as of March 2024, after the Reserve Bank of India (RBI) banned its associate Paytm Payments Bank Ltd (PPBL) from providing services citing non-compliance issues. Following the ban, Paytm reported a loss of Rs 550 crore in the first quarter of this year, Mint reported. Paytm had fired 1,000 employees in December last year too.
Retail, Fitness, Food
Walmart-owned Flipkart trimmed its workforce by 5-7 percent as it laid off 1,100-1,500 employees in January this year.
Fitness startup Cult.fit, which is backed by Zomato and Tata Digital, terminated 100-120 employees in January 2024. The decision aimed to “improve productivity and setting us up for full profitability in FY25,” as per a statement given to The Economic Times.
Food and grocery delivery platform Swiggy pruned 6 per cent of its workforce as it laid off around 350-400 employees in January this year. “This is linked to the planned IPO of Swiggy where it needs to present the best possible numbers,” a person aware of the matter told The Economic Times.
Meat delivery platform Licious terminated 80 employees in February this year. In a statement, the Bengaluru-based unicorn startup told Mint that it had over Rs 800 crore in funding and was on track to achieve profitability by the end of FY25.
Cab-hailing app Ola too laid off 180 employees in April.
'Focus Shift from Growth to Profitability Leading to Layoffs'
“These layoffs are a result of a shift in focus from growth to profitability,” said Dheeraj Singh, Founder of Global IIT Alumni Support Group.
He explained that when a company focuses on growth it aims to expand, invest and hire; as opposed to profitability, wherein the aim is optimisation of cost.
On being asked why layoffs are so rampant, Singh told The Quint, “If we talk about the tech space, their stocks are neither bleeding nor skyrocketing, i.e. there is no valuation pressure. So, it seems to be an intrinsic decision of the company to shift gears."
Bhattacharya, however, estimated that at least 20,000 people have lost their jobs between the last quarter of 2023 to now in the IT/ITeS sector. He justified that the number is higher than that given by layoffs.fyi as the tracker does not include forced and silent resignations.
Forced resignations occur when a company puts an employee on a Performance Improvement Programme (PIP), asking them to either perform on a project or quit. Silent resignations, on the other hand, are those wherein the employee is made to sign a contract, not to mention the termination.
'Company, Govt Policies Adding to Exploitation, Layoffs'
“In India, the abundance of cheap labour is leading the exploitation of employees. Companies follow ‘hire and fire’ policy on an ad-hoc basis, capitalising on the fact that the supply of skilled labour is way larger than the demand,” Bhattacharya told The Quint.
He claimed that some IT companies have now added a variable-pay component to the employees’ salary, which depends on the performance of the company and its ability to meet the projected profits on a Q-o-Q basis. This leads to the in-hand salary being way less than what was promised.
“By law, the state and central governments need to monitor such practices and intervene if the company has more than 300 employees. But they seem to have turned a blind eye," Bhattacharya said.
"In fact, some government policies are adding to this exploitation. For instance, look at the Karnataka government’s 14-hour-work policy for IT and ITeS sector, which our union vehemently opposed. Making employees work for 14 hours daily will give companies the liberty to cut headcounts and still get the same amount of work done.”Saubhik Bhattacharya, General Secretary of All India IT and ITeS Employees' Union (AIITEU)
The Karnataka cabinet has put the draft proposal on hold.
'Big Tech Layoffs Percolating To India's Tech Sector'
Across the globe too, tech companies are continuing to prune staff, aiming towards more profitability and integration of Artificial Intelligence (AI). Dell is likely to cut 20,000 jobs, according to a report in The Times of India. The Quint could not independently verify this number. Dell had fired 13,000 employees in 2023.
Cisco, which laid off 4,250 employees in February this year, is likely to go through a second round of layoffs, terminating around 4,000 employees again, according to a report in Reuters.
Earlier this month, Intel cut its headcount by 15,000 employees – or 15 percent of its workforce.
“Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low. We need bolder actions to address both...,” Intel CEO Pat Gelsinger stated in a note to his employees.
Other major tech giants that laid off employees en masse this year include–
Google, which fired at least a thousand employees in January.Amazon, laid off several hundred employees in January after cutting more than 27,000 jobs last year.SAP laid off 8,000 employees in January.
(Image: Kamran Akhter)
"As far as Big Tech is concerned, companies have either laid off, or are laying off or are in the process of laying off. Besides profitability, shifting use to AI is a contributing factor," Singh remarked.
He said that this has a "sharp impact" on the Indian tech sector.
"This is because most Indian tech companies are service providers to big corporates and multi-national companies in the USA and Europe. Because of the interconnectedness of the industries in the economy, layoffs abroad percolate down to the tech sector in India," Singh explained to The Quint.
The Quint has reached out to all companies mentioned in the story and will update the story once they respond.
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