In the ever-evolving landscape of Indian startups, the trajectory of layoffs in the first quarter of this year tells a tale of resilience amidst market fluctuations. According to data compiled by layoffs.fyi, the number of workers laid off decreased by a significant 60% compared to the same period last year, marking a notable shift in the startup ecosystem.

During the first quarter of 2023, 43 companies resorted to layoffs, affecting a staggering 5,358 employees. Among them, prominent names like Byju’s, Swiggy, and ShareChat made headlines with sizable layoffs across various departments. Byju’s, the edtech giant, trimmed its workforce by letting go of 1,500 employees, while Swiggy and ShareChat bid farewell to 380 and 500 workers respectively.

Fast forward to this year, and the layoffs landscape seems to be undergoing a transformation. Eleven startups initiated layoffs in the first quarter, with industry heavyweights like Flipkart and Swiggy at the forefront. Flipkart’s decision to trim its employee base by approximately 1,100 as part of its annual performance reviews sent ripples across the industry. Similarly, Swiggy’s restructuring led to the departure of 400 employees in January alone.

The dynamics of layoffs in the startup ecosystem are intricately linked to funding cycles and capital availability. In 2021, a surge in funding witnessed a comparatively lower number of layoffs, while the funding winter of the previous year saw a significant spike in job cuts. However, with funding rounds beginning to normalize in 2024, especially for early-stage startups, the frequency and scale of layoffs are expected to decrease.

Tracxn Technologies’ latest funding data sheds light on this evolving trend. Early-stage funding rounds saw a notable uptick of 28% in the first quarter, indicating renewed investor confidence. Conversely, seed-stage and late-stage rounds witnessed declines of 7% and 46% respectively, reflecting a nuanced shift in investor preferences.

As the startup ecosystem continues to navigate the ebbs and flows of funding dynamics, adaptability emerges as a crucial factor for sustainability. While layoffs remain a challenging reality for many, the evolving funding landscape offers a glimmer of hope for a more stable future. With cautious optimism, startups are poised to weather the storms and emerge stronger on the other side.