At halfway mark, more technology sector layoffs in 2023 than in 2022

Bengaluru is worst-affected among cities, even as it continues to top start-up fundraising

More people working in India’s technology industry have lost their jobs in the first six months of 2023 than the corresponding period in 2022.

A total of 10,774 employees have been laid off in the first six months this year in India, according to data from Layoffs.fyi, a website tracking job cuts in the technology sector. This is nearly two-thirds more than 6,530 job losses over a similar period in 2022.

The website collates information on layoffs from media reports. While not an exact indicator of job losses, it gives a broad sense of the employment situation. Investors have reduced the amount of money they allocate to start-ups amid rising interest rates and increased risk aversion. Higher interest rates make capital more expensive, and rising risk aversion makes investors less willing to bet on unproven ventures.

Job losses numbered 12,932 among tech employees in 2020, the first year of the pandemic in India. This dropped to 4,080 in 2021 as start-up funding increased. The situation began to turn in 2022, and 2023 looks set to be worse in both India and the rest of the world.

There were 213,020 tech job losses reported globally in the first six months of 2023. This is a multi-fold increase from the 45,166 job losses seen in the corresponding period for 2022 globally. The US accounted for the bulk of the increase. There were 148,491 job losses in the first six months of 2023. This is equivalent to nearly seven out of every 10 reported job losses globally. This 372 per cent increase in reported global layoffs for the first half of 2023, compared to a similar period in 2022, has been significantly higher than the 65 per cent increase seen in India.

India’s job losses are concentrated in a few cities where start-up activity and technology companies are most active. Around 6,967 tech employees lost their jobs in Bengaluru, the highest among Indian cities, partially because of its evolution in recent years as a start-up hub. Mumbai has the second highest (1,410), followed by Gurugram (1,105), New Delhi (487) and Chennai (400).

Edtech companies have been the worst affected. The sector observed 3,610 layoffs in the first half of this year. Next were food ventures with 1,915 layoffs, followed by retail (1,272), healthcare (891) and consumer (718). The top three sectors accounted for nearly two-thirds of the total recorded layoffs.

Start-up funding has fallen 72 per cent in the first half of 2023, compared to the first six months of the previous year, according to data from start-up tracker Tracxn. The total fund-raising in the first half of 2023 was $5.5 billion spread across 536 rounds. There were 1,586 rounds of funding in the first half of 2022 worth $19.7 billion. Seed funding, which involves start-ups at their earliest stage, was worth $315 million in the first six months of 2023, compared to $1.1 billion in the same period for 2022. Bengaluru also emerged as the city that received the most start-up funding at 51 per cent of the total capital raised across stages.