Indian startups laid off over 4,500 employees since July

Indian startups have cut more than 4,500 jobs since July last year, according to data from executive search firm Longhouse Consulting.

A sudden ban on online real-money gaming forced several startups to shut overnight, contributing to the surge in layoffs. However, industry experts say the trend goes beyond regulatory shocks. Selective capital flow into startups and investor pressure to achieve profitability have made leaner teams the norm, with companies prioritizing only roles critical to growth.

Besides gaming, startups across sectors are also restructuring as AI-first models take center stage. Home décor startup Livspace recently let go of 1,000 employees as part of its AI-focused strategy, highlighting how companies are redesigning workforce structures around technology.


“Investors are now rewarding startups that can achieve significant milestones with optimised headcounts. By building lean, startups are not just reacting to tighter funding environment; they are de-risking their models against macroeconomic volatility. This lean by design approach allows for longer runways,” said Viswanath PS, MD & CEO at Randstad India.

Anshuman Das, CEO and founder of Longhouse, added that even early-stage startups seeking growth funding must now demonstrate a path to profitability. “From the start, hence, they are designing the companies very differently. They are not doing big hiring in all functions but only adding incremental hires and senior hiring wherever it is a must,” he said.

Das also noted that as many startups prepare for IPOs, cost-cutting and profit-making have become top priorities. “Much of the big money in 2024 and 2025 flowed into quick commerce. Sectors such as traditional SaaS are not attracting big money with the AI economy taking over,” he explained.

Layoffs have not been confined to gaming alone. Companies such as Porter, Zepto, Krutrim, and Zupee have also reduced headcount over the same period, the data revealed. Aditya Narayan Mishra, MD & CEO at CIEL HR, said, “There are some targeted corrections, especially in roles that were over-hired during the boom phase. Every hire has to justify itself. If not, the position is reconsidered. Hiring is definitely more selective and strategic.”

While the pace of layoffs has moderated recently, demand for specialists with four to ten years of experience has grown. Green-tech and AI-first ventures are expected to lead job creation, Viswanath said. As companies focus on operational efficiency, many roles are shifting to tier-two cities, while remote tech roles for overseas startups are also rising, Das added.

The restructuring reflects a broader shift in India’s startup ecosystem: one where growth and technology adoption are prioritized over expansive hiring, and leaner teams are seen as a hedge against market volatility.