After three bruising years of funding slowdown and aggressive cost-cutting, the country’s startup ecosystem is beginning to show early signs of labour market stabilisation, with layoffs easing both in scale and frequency in 2025.
Data from layoffs.fyi, which tracks global technology job cuts, shows that 33 domestic startups have laid off 6,995 employees so far this year. This marks a sharp improvement from the same period in 2024, when 44 startups cut 9,195 jobs. In percentage terms, the number of companies resorting to layoffs has declined by 25%, while total job losses are down nearly 24% year-on-year. The moderation suggests that startups are moving past headcount rationalisation and adopting a more measured approach to growth.
The improvement comes after a prolonged correction phase triggered by the collapse of easy capital following the 2021 funding boom. Through 2023 and much of 2024, startups responded to tighter capital availability by trimming teams, shutting non-core businesses and prioritising profitability over expansion. While hiring has not returned to the pace seen during peak funding years, the era of frequent mass layoffs appears to be waning.
Funding Famine vs. Operational Stability
However, the easing of layoffs has not yet translated into a strong funding revival. According to Tracxn data, domestic tech startups raised $7.7 billion in the first nine months of 2025, down 23% from $10.1 billion raised during the same period in 2024 and 6% lower than 2023 levels. Despite the slowdown, India continues to rank as the world’s third-largest startup funding market, behind only the US and the UK.
Sector-Specific Stress
Job cuts in 2025 have been concentrated among a limited set of companies rather than spread across the ecosystem. Ola Electric Mobility accounted for one of the largest reductions, reportedly laying off around 1,000 employees and contract workers over a two-month period. Quick commerce unicorn Zepto cut about 300 roles, while logistics platform Porter reduced its workforce by roughly 350 employees.
The real-money gaming industry was among the hardest hit following a regulatory ban. In September, Head Digital Works, the parent of A23 Rummy and A23 Poker, laid off around 500 employees. The move also led to job cuts at Mobile Premier League and Games24x7, according to layoffs.fyi.
Last year, large layoffs were reported at Byju’s, Paytm, Ola Electric, Flipkart and Swiggy.
The trend of layoffs moderating is visible globally also. Worldwide, 257 tech companies have laid off about 121,500 employees so far in 2025, down from nearly 152,900 over the same period last year.
