Startups are cautiously hiring again; 80,000 new tech jobs expected in FY26, data shows

With the funding winter easing, hiring by Indian startups improved in financial year 2025, with 60,000 net new employee additions. This took the total startup workforce to 5.9 lakh at the end of the fiscal year, according to Xpheno data.

In total, 1.6 lakh individuals were hired, accounting for both net growth and one lakh attrition-linked backfills. This is a healthy increase from the 1.2 lakh employees added in FY24, though it is yet to reach the 1.8 lakh additions observed in FY23.

According to Xpheno, tech hiring may return to its pre-downturn highs in FY26. The firm expects 80,000 net additions, taking the total tech workforce from 5.9 lakh at the close of FY25 to 6.7 lakh by the end of FY26.

"With GCCs potentially in the lead, followed by a recovering IT services sector and startups sector, the fiscal ahead will see higher talent action than FY25," Prasadh MS, head of workforce research at Xpheno, told ET. He added that net headcount growth is likely to be driven by startups in quick commerce, eRetail, marketplaces, fintech (payments & remittances, lending & credit) and F&B retail.

A report by TeamLease shows similar optimism in the startup and tech sector. The ecosystem is showing signs of a cautious recovery after the funding reset, with a net employment change (NEC) of +6.9% for the first half of FY26, the company’s Employment Outlook Report said.

This is down from +8.9% in the second half of FY24-25, the report observed. About 69% of employers in this area will expand their workforce, driven by advancements in AI-driven product scaling, growth marketing, and cloud-native engineering, the report said. However, about 12% are expecting reductions due to cost discipline, while 19% expect no change.

The TeamLease report added that roles such as DevOps, product manager, and full-stack developer are in demand, especially in B2C, D2C, and platform-first startups.

Prasadh added that the impact of AI on hiring trends is yet to be felt in a prominent way. "The mainstream application of AI in enterprises is largely at the lower spectrum of rule-based activities and low complexity roles and functions. Startups haven't begun the replacement of roles with AI at the low spectrum roles, though the potential to do so is high," he explained.

Five-year outlook

Data showed that the tech startups cohort in India has moved from 2.5 lakh to 3.6 lakh in white-collar talent size and registered a collective 7.1 gross hiring count from FY21 to FY25.

The pandemic led to a cautious FY21 for startups, with only 50,000 net hires. However, FY22 saw a massive bounceback, with 2.1 lakh net additions, translating to 800-900 hires per working day, primarily due to hyper-hiring in the tech sector. While FY23 started strong, hiring slowed in the second half as the funding winter set in.

FY24 was a high-impact year as uncertain macros drove mass layoffs across the sector, with net additions dropping to the same levels as during the pandemic.