After a challenging period marked by layoffs and declining investments, Indian startups are poised to ramp up hiring efforts in 2025. With funding levels showing signs of recovery, staffing firms project a 20-30% increase in hiring activity across startups, signaling renewed optimism for the ecosystem.

Layoffs Decline Amid Funding Revival

Layoffs in the startup sector have significantly decreased, dropping by 46% year-on-year (YoY) to 8,895 in 2024, compared to 16,398 in 2023, according to data from Layoffs.fyi.

This positive shift is attributed to an improved funding landscape. Venture funding has risen by 14% YoY, reaching $10.9 billion in 2024, paving the way for startups to refocus on growth and talent acquisition.

Key Sectors Driving Hiring Trends

The hiring resurgence is expected to be led by dynamic sectors such as:

• Retail and E-commerce: Fueled by digital transformation and evolving consumer behavior.
• Fintech: Boosted by increased demand for digital payments and financial services.
• FMCG, Automotive, Travel, and Hospitality: Benefiting from post-pandemic recovery and a growing consumer base.

In contrast, sectors like BFSI, telecom, healthcare, pharma, and energy may see slower hiring activity, particularly in Q1 2025.

Impact of the Funding Winter

The “funding winter” significantly curtailed startup growth, with investments falling from a peak of $36 billion in 2021 to $9.6 billion in 2023, as per Venture Intelligence.

However, with funding levels stabilizing, startups are now prioritizing long-term strategies, restructuring teams, and optimizing operations. For example:

• A Series A funding round of $10 million typically enables the hiring of 25 IT professionals.
• A $20 million round supports recruitment of 40 senior-level executives, according to Neeti Sharma, CEO of TeamLease Digital.

Challenges Amid Recovery

Despite the recovery, major startups like Paytm, Flipkart, and Byju’s executed significant layoffs in 2024. Current active talent demand from startups stands at 20,000 openings, still below the 45,000-55,000 levels seen during the hiring peaks of 2021.

Future Outlook: Rising Demand and Stabilized Attrition

By mid-2025, hiring demand is projected to surpass levels last seen in early 2022. Key trends include:

• Salary Growth: Expectations for a 5-7% average increase.
• Attrition Rates: Expected to stabilize as startups invest in employee retention and engagement programs.

Startups are placing a stronger emphasis on loyalty-building strategies to reduce turnover and foster a more resilient workforce.

Conclusion

With an improved funding landscape and increasing demand for skilled talent, Indian startups are on track to boost hiring activity significantly in 2025. While challenges persist, the ecosystem’s resilience and adaptability are paving the way for sustained growth. Startups focusing on employee engagement and retention will be better positioned to capitalize on this upward trend.

This year marks a renewed phase of growth, driven by innovation, improved funding, and strategic workforce optimization.

Sources: Business Standard, Moneycontrol, Venture Intelligence, Layoffs.fyi