India’s startup ecosystem seems to be improving in 2025, with startup layoffs seeing a steep drop from last year. Experts believe this trend indicates stabilising investor sentiment and better financial prudence.
According to data from layoffs.fyi, a global tracker of tech sector job cuts, only 1,602 employees have been laid off by seven Indian startups in the first quarter of 2025. This is less than half the number recorded during the same period in 2024, when 20 companies cut 3,355 jobs.
The decline is both a matter of numerical magnitude as well as in its scope of relevance to the industry, and thus fewer firms are undertaking employee-cutting initiatives. Analysts comment that this stems from more concerted efforts in maintaining costs, narrower operations, as well as concentrating on sustainable development after two trying years of money slowdowns as well as a correction of overvaluation.
“While the sector hasn’t returned to hyper-growth mode, this dip in layoffs signals a shift from reactive downsizing to strategic realignment,” said a senior analyst from a Mumbai-based venture capital firm said to TOI.
The past two years have been rough for Indian startups, with many facing severe liquidity constraints as global risk capital dried up. Unicorn valuations plummeted, and high-profile firms resorted to mass layoffs and business model pivots. However, 2025 appears to be ushering in a cautiously optimistic phase.
Startup Layoffs: Signs of Recovery
Experts believe that startups are adapting to the “new normal” of capital efficiency. Founders are said to be focusing on generating revenue over vanity metrics, and are designing companies with a focus on profitability instead of raw scale. This shift is in line with changing investor expectations, as funding rounds increasingly become selective and milestone-focused.
“The downward trend in layoffs is a positive development, but it’s too early to declare a full recovery,” said a Delhi-based startup consultant. “The real test will be how well companies adapt to long-term capital constraints and changing market dynamics over the next few quarters.”
Despite these cautionary notes, the tone of the startup ecosystem is shifting from survival to recalibration. With fewer pink slips being handed out and hiring freezes gradually lifting in select sectors such as SaaS, fintech, and healthtech, there is a growing sense that the worst may be behind.
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