Indian startups have cut more than 4,500 jobs over the past eight months, as tighter funding, regulatory disruption and investor demands for profitability reshape the country’s once high-growth ecosystem.
Data cited by The Times of India from executive search firm Longhouse Consulting show layoffs began accelerating from July last year. The report indicates the cuts were driven largely by slower capital flows, selective funding and mounting pressure on founders to deliver sustainable business models, rather than purely by artificial intelligence-led automation.
One of the sharpest triggers was the sudden ban on online real-money gaming, which forced several companies in the segment to halt operations. According to The Times of India, the closures led to immediate job losses and significantly inflated the overall layoff tally during the period.
Beyond gaming, however, the underlying shift appears structural.
With venture capital turning cautious, investors are backing fewer startups and demanding stronger unit economics. That has translated into leaner organisations, limited lateral hiring and tighter scrutiny of operating costs. Longhouse Consulting’s chief executive, Anshuman Das, told The Times of India that startups are no longer hiring aggressively across functions but are adding incremental or senior talent only where necessary.
The reset reflects a broader recalibration from growth-at-all-costs to capital discipline.
The job cuts have spanned sectors including quick commerce, logistics and gaming. Companies such as Porter, Zepto, Krutrim and Zupee have reduced headcount during the period, according to the report.
Zepto eliminated around 300 roles in October 2025 as it sought to lower costs amid intensifying competition, India Today Tech reported. A spokesperson for the company said the layoffs were not linked to artificial intelligence optimisation.
Zupee, meanwhile, conducted two rounds of cuts, shedding more than 200 roles in its second phase and taking total layoffs to nearly 370 by January 2026. In an earlier statement to Storyboard18, Zupee founder and chief executive Dilsher Singh Malhi described the restructuring as necessary to align with long-term priorities and ensure sustainability.
Artificial intelligence has nonetheless influenced workforce planning. Some startups are designing operations around smaller teams, relying more heavily on automation and AI-led efficiencies. Home décor platform Livspace recently laid off around 1,000 employees as part of an AI-driven cost rationalisation effort, according to India Today Tech, though the company framed the move as part of operational streamlining rather than wholesale replacement of roles.
While AI is reshaping how startups think about scale, funding realities appear to be the dominant force behind recent layoffs.
Globally, the technology sector continues to undergo restructuring amid higher interest rates, cautious investors and shifting market expectations. India’s startup ecosystem, which saw record funding inflows during the pandemic boom years, is now adjusting to a more disciplined capital environment.
The near-term outlook suggests hiring will remain selective. Startups are likely to prioritise profitability, automation and targeted expansion over aggressive workforce growth — signalling a maturing ecosystem, but one with fewer buffers for excess headcount.