The Hidden Layoffs: An Unreported Consequence of the Start-up Boom

In the past two years, the Indian start-up ecosystem has witnessed a disturbing trend – a surge in concealed layoffs. According to data from tech-focused hiring firm TopHire, more than 1,400 companies have let go of approximately 91,000 employees. When factoring in hidden layoffs, this number could be as high as 120,000. Prominent firms, including unicorns like Byju’s, Unacademy, and Oyo, have downsized their teams in response to funding constraints caused by a liquidity crisis.

While publicly available data only reflects reported layoffs of around 25,000-28,000, this is merely the tip of the iceberg. Start-ups have resorted to various cost-cutting measures, including reducing marketing expenses, realigning cost structures, and trimming employee costs. Consequently, many consultants, contract employees, and non-payroll workers have been left out of the official layoff figures. Shiv Agrawal, managing director of ABC Consultants, estimates that start-ups have let go of at least double the reported numbers.

The impact of these layoffs not only affects direct employment but also indirect employment. Sectors such as agritech, logitech fintech, edtech, and D2C account for almost 70% of the layoffs. Considering that each direct job in this cohort typically generates 2-2.5 indirect jobs, the impact on indirect employment is likely to be significant.

Additionally, there are disguised layoffs that often go unreported. These include asking remote workers to return to the office in a different city, tightening performance improvement plans to encourage underperformers to leave, and other indirect forms of cutbacks. The actual number of affected employees in start-ups could be well over 120,000 when considering both direct and disguised layoffs.

While the start-up ecosystem has also seen headcount additions in recent years, the surge in concealed and underreported layoffs raises concerns about the true state of job security and stability in the industry. As the funding landscape evolves and start-ups face increasing pressure to turn profitable, the impact on employees, both direct and indirect, remains a critical issue.

– TopHire
– PwC India
– Mint
– ABC Consultants
– Quess Corp
– Xpheno