Anxious on India’s Layoffs: Tech, Startups, and Economic Shifts in 2025

India’s job market, particularly in technology, startups, and related sectors, has faced unprecedented challenges in 2025, with widespread layoffs reshaping industries once considered pillars of economic growth. This detailed blog post explores the recent wave of Layoffs by major companies in India, their causes, impacts on employees and the economy, and the broader implications for the future of work in the country.

Overview of the Layoff Landscape in 2025

The year 2025 has seen a significant surge in layoffs across India’s technology, startup, edtech, agritech, and consumer sectors. Companies are grappling with a combination of global economic uncertainties, technological disruptions like AI and automation, and a prolonged funding winter that began in 2022. These layoffs, affecting tens of thousands of employees, reflect a strategic shift toward profitability, operational efficiency, and adaptation to new market realities. Below is a comprehensive breakdown of the major companies involved, the scale of their layoffs, and the underlying reasons.

1. Tata Consultancy Services (TCS)

• Scale of Layoffs: Approximately 12,000–12,261 employees, representing 2% of TCS’s global workforce of 613,069 (as of June 30, 2025). The layoffs primarily target middle and senior management roles and are planned to occur throughout fiscal year 2026 (April 2025–March 2026).
• Reasons: TCS, India’s largest IT services company, is restructuring to become a “future-ready organization.” CEO K Krithivasan cited skill mismatches and challenges in redeploying certain employees as primary reasons, emphasizing investments in AI, new technologies, and market expansion. While Krithivasan denied that AI directly caused the layoffs, industry experts point to automation and reduced demand in global markets as contributing factors.
• Details: This is the largest workforce reduction in TCS’s history, surpassing a 2015 layoff of about 3,000 employees. Affected employees are being offered severance packages, extended health insurance, and outplacement assistance. Concurrently, TCS announced salary hikes for 80% of its workforce, primarily junior and mid-level employees, effective September 1, 2025, indicating a focus on retaining younger talent while trimming higher-cost senior roles.
• Controversy: The layoffs have drawn significant criticism. Employees and unions, including the Karnataka State IT/ITeS Employees Union (KITU) and Nascent Information Technology Employees Senate (NITES), allege forced resignations and violations of India’s Industrial Disputes Act, 1947, which requires government approval for mass layoffs in certain cases. Reports on X and Reddit highlight employee grievances, including abrupt terminations, coercive HR tactics, and threats of blacklisting or withheld payments. KITU filed a complaint with the Karnataka Labour Commissioner, and TCS’s absence from a scheduled meeting with the Chief Labour Commissioner fueled further discontent.
• Impact: The layoffs have raised concerns about job security in India’s $283 billion IT outsourcing sector, with TCS’s stock declining nearly 30% over the past year. Analysts suggest the layoffs could improve margins by 100–150 basis points but warn of reputational risks and potential disruptions in small and medium enterprises (SMEs) reliant on IT spending.

2. Ola Electric

• Scale of Layoffs: Over 1,000 employees and contract workers, marking the second round of layoffs in less than five months after cutting 500 jobs in November 2024.
• Reasons: The Bengaluru-based electric vehicle (EV) manufacturer is addressing financial challenges, including mounting losses and difficulties in securing new funding. The layoffs span departments such as procurement, customer relations, fulfillment, and charging infrastructure, reflecting a push to streamline operations in a competitive EV market.
• Details: Ola Electric’s layoffs are part of a broader cost-cutting strategy as the company struggles to achieve profitability amid high operational costs and market pressures. The company’s focus on automation and lean operations has also contributed to workforce reductions.
• Impact: The layoffs have sparked concerns about Ola’s long-term sustainability, with employees expressing frustration on platforms like X over job insecurity and lack of transparency. The EV sector’s reliance on government incentives and funding makes it particularly vulnerable to economic shifts.

3. Gupshup

• Scale of Layoffs: Nearly 500 employees between December 2024 and April 2025, with 200 laid off in April and 300 in December.
• Reasons: The conversational AI unicorn, valued at $1.4 billion, is focusing on operational efficiency and profitability to maintain its leadership in AI-driven customer engagement. Many affected employees were from teams acquired during earlier expansions, indicating challenges in integrating acquired talent.
• Details: Gupshup claims to have achieved profitability and has no further layoff plans. The company’s restructuring reflects a broader trend among tech startups to prioritize sustainable growth over rapid expansion.
• Impact: The layoffs highlight the difficulties of scaling AI-driven businesses while managing workforce integration. Employees affected by the cuts have voiced concerns about limited severance support and job market challenges.

4. WayCool

• Scale of Layoffs: Over 200 employees, marking the third round of layoffs in 12 months.
• Reasons: The Chennai-based agritech startup is streamlining operations to curb losses after failing to secure new funding rounds. The company has faced challenges in scaling its supply chain and achieving profitability in a capital-constrained environment.
• Details: WayCool’s layoffs reflect the broader struggles of India’s agritech sector, which has been hit hard by the funding winter. The company’s focus on cost-cutting has led to reduced headcount across operations and support functions.
• Impact: The layoffs have raised concerns about the viability of agritech startups, with affected employees facing uncertainty in a sector with limited immediate job opportunities.

5. PocketFM

• Scale of Layoffs: Approximately 200 writers, primarily for its U.S.-based audio series.
• Reasons: The Bengaluru-based audio series platform is restructuring to optimize operations, though specific reasons for targeting writers remain unclear. The move may reflect a shift toward AI-generated content or cost-cutting in content creation.
• Details: PocketFM’s layoffs are part of a broader trend among content-driven startups to reduce reliance on human labor in favor of scalable, tech-driven solutions.
• Impact: The layoffs have sparked discussions about the role of AI in creative industries, with writers expressing concerns about job displacement on platforms like X.

6. Unacademy

• Scale of Layoffs: Around 250 employees, with 100 in marketing, business, and product roles, and 150 in sales.
• Reasons: The edtech giant is restructuring to achieve profitability after years of aggressive expansion and insufficient progress on financial goals. The layoffs are part of a broader cost-cutting strategy.
• Details: Unacademy has faced multiple rounds of layoffs, with over 1,000 employees let go in previous years. The company’s challenges reflect broader difficulties in the edtech sector, including reduced demand for online learning post-COVID and increased competition.
• Impact: The layoffs have further eroded confidence in the edtech sector, with employees and industry observers questioning the sustainability of high-valuation startups.

7. Third Wave Coffee

• Scale of Layoffs: Around 80 employees, or 10% of its workforce.
• Reasons: The Bengaluru-based coffee QSR chain conducted a one-time restructuring to consolidate teams after a recent fundraise, aiming to strengthen its market position.
• Details: The layoffs affected multiple departments, but the company has not addressed concerns about pending vendor payments or severance packages, leading to criticism from affected employees.
• Impact: The layoffs highlight the challenges faced by consumer startups in balancing growth and operational efficiency in a competitive market.

8. Other Notable Layoffs

• Simplilearn: The Bengaluru-based edtech startup laid off around 200 employees, citing poor performance as the primary reason.
• upGrad Campus: The edtech subsidiary cut 120 employees, or 30% of its workforce, as part of a restructuring effort.
• Fittr: The Pune-based fitness startup laid off 30–60 employees (11% of its workforce) across marketing, sales, client servicing, and tech teams.
• MediBuddy: The healthtech startup let go of 200 employees (8% of its workforce) to eliminate role redundancies and ensure long-term stability.
• GenWise: The senior citizen-focused startup laid off employees to extend its runway amid rising costs and funding challenges.
• Zoplar: The medical equipment procurement startup shut down operations, laying off all employees just a month after raising $3.4 million.

Root Causes of the Layoffs

The layoffs in 2025 are driven by a confluence of macroeconomic, technological, and industry-specific factors:

1. Global Economic Uncertainties:
   
   • High interest rates, inflationary pressures, and geopolitical tensions, including U.S. tariffs and reduced demand in markets like China, have strained Indian companies with global exposure.
   • The IT sector, which relies heavily on U.S. and European clients, is facing reduced spending due to economic slowdowns in these regions.
2. AI and Automation:
   
   • The rapid adoption of AI and automation is reshaping job roles across industries. While companies like TCS deny direct AI-driven layoffs, experts estimate that AI could displace up to 500,000 jobs in India’s IT sector over the next two to three years.
   • Roles in customer support, content creation, and routine IT tasks are increasingly automated, leading to workforce reductions.
3. Funding Winter:
   
   • The prolonged funding winter, which began in 2022, has limited capital availability for startups. Companies like WayCool, GenWise, and Zoplar have struggled to secure funding, forcing them to cut costs or shut down.
   • Investors are prioritizing profitability over growth, pushing startups to adopt leaner operations.
4. Overhiring During the Pandemic:
   
   • Many companies, particularly in tech and edtech, overhired during the COVID-19 boom, expecting sustained demand. As markets normalize, these companies are “right-sizing” their workforces to align with current realities.
5. Sector-Specific Challenges:
   
   • IT Services: Reduced global demand and client budget cuts have pressured firms like TCS to optimize costs.
   • Startups: High burn rates, coupled with valuation corrections, have forced startups to prioritize profitability.
   • Edtech: Post-COVID declines in online learning demand have hit companies like Unacademy and Simplilearn hard.
   • Agritech and Consumer: Funding constraints and operational inefficiencies have challenged firms like WayCool and Third Wave Coffee.

Impact on Employees and the Economy

Employee Morale and Job Security

• Erosion of Trust: The layoffs have shattered the perception of job security in sectors like IT and startups, once seen as stable career paths. Social media platforms like X and Reddit are rife with employee accounts of abrupt terminations, inadequate notice periods, and coercive HR practices, such as forced resignations under threats of blacklisting.
• Mental Health Concerns: The sudden loss of jobs, particularly for senior employees with limited reemployment prospects, has raised concerns about mental health and financial stability. Unions like KITU and NITES are advocating for better severance and support mechanisms.

Economic Ripple Effects

• SME and Local Economies: The layoffs threaten SMEs and labor-intensive towns like Tiruppur, Surat, and Ludhiana, which rely on IT and startup ecosystems. Economists estimate that 10–15 lakh jobs could be indirectly affected due to reduced spending and supply chain disruptions.
• Unemployment Trends: India’s urban unemployment rate rose to 7.1% in June 2025, with youth unemployment (ages 15–29) reaching 19%. The layoffs exacerbate these trends, particularly for young professionals in tech-heavy cities like Bengaluru, Hyderabad, and Pune.

Support for Affected Workers

• Severance Packages: Companies like TCS, MediBuddy, and Gupshup are offering severance benefits, extended health insurance, and outplacement assistance, but employees and unions argue these measures are insufficient.
• Union Advocacy: KITU and NITES are pushing for stricter enforcement of labor laws, including mandatory government approvals for mass layoffs and better protections for contract workers.
• Reskilling Needs: Industry bodies like Nasscom emphasize the need for reskilling programs to bridge the skill gap, particularly in AI, cloud computing, and data analytics, to help laid-off workers transition to new roles.

Broader Implications for India’s Job Market

The layoffs in 2025 signal a transformative period for India’s workforce and economy. Key implications include:

1. Shift Toward High-Value Skills:
   
   • The rise of AI and automation is pushing companies to prioritize specialized, high-value skills. Employees in routine or low-skill roles face higher risks of displacement, while demand grows for expertise in AI, machine learning, and emerging technologies.
   • Companies and governments must invest in reskilling programs to prepare workers for this shift.
2. Startup Ecosystem Challenges:
   
   • The funding winter and layoffs underscore the fragility of India’s startup ecosystem. While unicorns like Gupshup claim profitability, many others struggle to balance growth and sustainability.
   • The closure of startups like Zoplar highlights the risks of over-reliance on venture capital in nascent sectors.
3. Policy and Regulatory Needs:
   
   • The controversies surrounding TCS and other layoffs highlight gaps in India’s labor laws, particularly for white-collar workers. Unions are calling for stronger protections, including mandatory notice periods and government oversight of mass layoffs.
   • Policymakers must balance industry needs with worker rights to ensure a fair transition during economic shifts.
4. Global Competitiveness:
   
   • India’s IT sector, a global leader, faces challenges from automation and competition from other markets. To remain competitive, companies must innovate and diversify into high-value services like AI, cybersecurity, and digital transformation.
   • The layoffs could drive short-term cost savings but risk long-term talent shortages if not paired with upskilling initiatives.

Looking Ahead: Navigating the Future of Work

The wave of layoffs in 2025 is a wake-up call for India’s workforce, companies, and policymakers. To navigate this new era, several steps are critical:

• Upskilling and Reskilling: Government and industry-led programs must focus on equipping workers with skills in AI, data science, and emerging technologies. Initiatives like Nasscom’s FutureSkills platform can play a pivotal role.
• Support for Affected Workers: Companies should offer robust severance packages, mental health support, and job placement assistance to ease transitions. Transparent communication can help rebuild trust.
• Policy Reforms: Strengthening labor laws to protect white-collar workers and ensuring compliance with existing regulations will be key to preventing exploitation during layoffs.
• Sustainable Business Models: Startups and IT firms must prioritize sustainable growth over aggressive expansion, balancing innovation with financial stability.
• Public-Private Collaboration: Governments, industry bodies, and educational institutions must collaborate to create a resilient workforce capable of adapting to technological and economic shifts.

Conclusion

The layoffs in India in 2025 reflect a complex interplay of global economic challenges, technological disruptions, and industry-specific pressures. While companies like TCS, Ola Electric, and Unacademy are adapting to new realities, the human cost of these layoffs is significant, with thousands of workers facing uncertainty. As India’s economy evolves, the focus must shift toward reskilling, policy reform, and sustainable growth to ensure a robust and inclusive job market. The road ahead will require collective effort from all stakeholders to turn these challenges into opportunities for innovation and resilience.

Sources: Web references from layoffs.fyi, Inc42, The Indian Express, India Today, CNBC, Economic Times, and posts on X.

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