Indian startups have laid off more than 3,600 employees in the first five months of 2025, reflecting the ongoing impact of automation, cost-cutting, and a sustained focus on profitability. This wave of layoffs, while significant, marks a notable decline compared to previous years, signaling a cautious recovery and increased financial discipline in the ecosystem.
Startups are increasingly leveraging generative AI and automation to streamline operations and reduce manual jobs, making several roles redundant. After the funding winter that started in 2022, startups have shifted from a “growth at all costs” approach to prioritizing leaner, more efficient operations. While funding has stabilized in recent quarters, many startups are still grappling with losses and are under pressure to achieve profitability quickly.
Major companies like Ola Electric (1,000 layoffs), Gupshup (200), Cars24 (200), and VerSe Innovation (350) have been among the most prominent to announce job cuts in 2025. The layoffs have affected both tech and non-tech roles, with automation cited as a primary driver.
Despite the early surge, the number of layoffs dropped sharply by May 2025. Only seven startups were responsible for about 1,600 job cuts in the most recent quarter, a 52% decline compared to the same period last year. This suggests that the worst of the layoff wave may be over, with the sector showing signs of stabilization and renewed investor confidence.
While these strategic moves may help startups survive and thrive in a competitive environment, they have caused considerable financial and mental distress among affected employees. The industry is now watching to see if these changes will lead to long-term sustainability and renewed job growth.
Indian startups have laid off over 3,600 employees in early 2025, mainly due to automation and profitability pressures. However, the pace of layoffs is slowing, hinting at a more stable and disciplined future for the sector.