The Indian startup ecosystem has witnessed significant churn between September 2022 and July 2023, as revealed by the latest data from PrivateCircle Research. A whopping 3.6 lakh employees across 111 Indian startup unicorns have left their jobs during the 11-month period. However, an impressive 3.7 lakh employees were concurrently welcomed into these startups during the same timeframe, showcasing the dynamic nature of the tech sector.
The provided data from PrivateCircle focuses on 111 startup unicorns in India’s major tech hubs: Bengaluru, Delhi-NCR, Mumbai, Chennai, Pune, and Hyderabad. This comprehensive analysis spans the period from September 2022 to July 2023. What makes this timeframe noteworthy is that, during these months, no new unicorns entered the bustling startup ecosystem.
The collective employee headcount of these 111 Indian startup unicorns rose by 12,765 individuals, from 429,949 employees in September 2022 to 442,714 individuals by July 2023. This uptick in employee numbers provides insights into the overall growth and stability of the startup ecosystem, especially during a specific timeframe marked by what is commonly referred to as a “funding winter.”
Let’s delve deeper into the attrition and retention metrics of employees within India’s 111 startup unicorns from September 2022 to July 2023. The objective is to identify the top-performing startup and the corresponding Indian city in terms of net additions to their headcount
Main Highlights
- On average, the attrition rate across the 111 unicorns stood at 4.72% during the period spanning from September 2022 to July 2023.
- In December 2022, a substantial 44,295 employees departed from unicorn companies, marking the peak from September 2022 to July 2023. The reasons behind this notable departure could be attributed to a combination of layoffs and voluntary resignations by employees.
- A positive shift in the hiring activity at unicorn startups became evident starting from April 2023, culminating in a steady increase to 43,361 newly hired employees in July 2023. Some notable unicorns driving this surge in workforce additions in July included Pb Fintech, BigBasket, Rebel Foods, and others.
- Bengaluru, India’s IT hub, witnessed a notable reduction in the workforce size of its startup unicorns, declining by 41,208 employees from September 2022 to July 2023. This net change figure is calculated by subtracting the number of employees exited from those hired during the period.
- In stark contrast, the unicorns based in Delhi experienced a noteworthy upswing, with a net increase of 52,420 employees recorded between September 2022 and July 2023.
- Some prominent unicorns, including PB Fintech, which runs Policybazaar and Paisabazaar, Tata Group-owned BigBasket, Rebel Foods, Paytm, and PhysicsWallah, have emerged as the top recruiters in the Indian startup ecosystem.
Factors Influencing Workforce Dynamics In the Indian Startup Ecosystem
Various factors influence workforce dynamics in Indian startups valued at more than $1 billion. The first significant factor revolves around layoffs, emerging as a leading contributor to employee departures. This surge in layoffs can be attributed to the prevailing funding winter in India’s startup industry. Therefore, a considerable number of startups have fired their underperforming employees during the period between September 2022 and July 2023.
Another reason could be that many unicorns are gearing up for their initial public offerings (IPOs). To enhance their financial standing and achieve profitability, startups are strategically trimming expenses, including reductions in advertising budgets and employee benefits. Consequently, there is a discernible focus on optimizing the workforce, leading to the termination of employees in non-essential or redundant positions.
An analyst emphasized that a notable number of employees are departing from their roles due to heightened work stress, particularly as companies transition away from the work-from-home culture. The shift in work dynamics has contributed to increased pressure on employees, influencing their decision to leave.
From September 2022 to July 2023, only three unicorns – Zerodha, Hike, and Zoho – successfully maintained an attrition rate of under 1%. This suggests these companies have implemented effective measures to mitigate employee turnover and foster a positive work environment.
On a broader scale, other unicorns, including Amagi, Postman, Freshworks, Acko, Cred, Games24x7, Druva, Icertis, and Dream11, demonstrated commendable employee retention, with an attrition rate of under 2% during the same period. This data underscores the varying attrition rates across different unicorns, reflecting diverse strategies in addressing the challenges posed by the evolving work landscape.
