Unicorn startups in India witnessed a reduction of approximately 6,700 employees between August 2023 and August 2024. This decline highlights the challenges startups face, including layoffs, evolving business strategies, and market conditions. PrivateCircle Research conducted an in-depth analysis of the workforce trends across 116 Indian unicorns, shedding light on hiring patterns, attrition rates, and regional dynamics.
Employment Numbers in Indian Unicorns
In August 2024, 116 Indian unicorns collectively employed 410,829 individuals. This marked a decrease from 417,561 employees in the same period the previous year. While the drop in employee count underscores the strain on certain startups, other regions and companies showed resilience and growth in workforce numbers.
Delhi-NCR emerged as the region with the most significant workforce addition during this period. Major contributors to this growth included prominent unicorns like PolicyBazaar, Blinkit, and Zomato. These companies expanded their teams despite the challenging economic landscape.
Chennai recorded the second-highest employee addition, demonstrating the city’s growing prominence as a startup hub. Bengaluru followed closely, reflecting its status as India’s technology and innovation capital.
Workforce Declines in Major Regions
Mumbai saw a net decrease of 7,024 employees, representing the highest workforce contraction among startup hubs. Pune and Hyderabad also experienced declines in workforce numbers, driven by layoffs and adjustments in business strategies.
Despite the overall reduction, unicorns maintained stable employee numbers while achieving high double-digit revenue growth. This indicates a focus on efficient human capital utilization.
Attrition Rates in Unicorn Startups
The analysis revealed an average attrition rate of 4.5% among the 116 unicorns. However, some companies stood out for their exceptional employee retention strategies. Unicorns like Zerodha, Zoho, and MapMyIndia maintained attrition rates of 1% or lower. This reflects their strong employee engagement and satisfaction initiatives.
Other unicorns with attrition rates below 2% included Ather Energy, Druva, Dream Sports, Icertis, and Uniphore. These companies demonstrated their ability to retain top talent, even in a competitive startup ecosystem.
Hiring Trends and Peaks
March 2024 emerged as the peak hiring month for Indian unicorns, with 42,000 new employees joining various startups. Companies like Paytm, BigBasket, and PB Fintech significantly increased their workforce during this period. Their hiring surge indicates confidence in market opportunities and business expansion plans.
On the other hand, September 2023 recorded the highest number of employee exits, with 39,000 workers leaving unicorn startups. This period of attrition highlights the challenges faced by startups in retaining employees amid layoffs and restructuring.
New Additions and Exclusions in Analysis
PrivateCircle’s analysis included new unicorns like Moneyview, Ather, and Rapido. However, certain companies were excluded due to the absence of employee count data in the EPFO (Employees’ Provident Fund Organisation) records. Excluded unicorns like Polygon, Hasura, and 5irechain operate from headquarters outside India.
Rivigo and Shopclues were also excluded from the analysis because they were acquired at valuations below $1 billion, disqualifying them from unicorn status.
Factors Influencing Workforce Trends
Layoffs contributed significantly to the decline in employee numbers across several unicorns. Market challenges, competition, and funding constraints drove many startups to optimize their workforce. Despite these setbacks, unicorn startups continued to be major employers in the country.
The efficient use of human capital emerged as a critical strategy. Many unicorns maintained stable employee numbers while achieving robust revenue growth. This trend reflects a shift towards lean operations and cost optimization.
Startup Closures and Regional Impact
The Indian startup ecosystem also faced closures of over 5,000 startups registered under the Startup India initiative. These closures accounted for 3.3% of the 152,000 startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT).
Maharashtra recorded the highest number of closures, with 929 startups shutting down. Karnataka, Delhi, Uttar Pradesh, and Telangana followed with significant numbers of closures. Industry experts attributed these closures to competition, lack of funding, and unclear market strategies.
Regional Insights: Delhi-NCR Leads Workforce Growth
Delhi-NCR experienced the highest workforce growth among startup hubs. Unicorns based in the region added a significant number of employees, driven by expanding operations and robust market strategies. Companies like PolicyBazaar, Blinkit, and Zomato led this growth.
Chennai also saw notable workforce additions, reflecting the city’s growing role in India’s startup ecosystem. Bengaluru continued to attract talent and investment, strengthening its position as a global innovation hub.
Mumbai: Workforce Contraction Amidst Challenges
Mumbai faced the steepest workforce decline among major regions, losing over 7,000 employees. Layoffs and business adjustments contributed to this trend. Despite these challenges, Mumbai remains a key player in India’s startup landscape.
Pune and Hyderabad also experienced workforce reductions, highlighting the need for startups in these regions to reassess strategies and adapt to market demands.
Unicorns Excelling in Employee Retention
Certain unicorns excelled in retaining employees, even during challenging times. Companies like Zerodha, Zoho, and MapMyIndia demonstrated exemplary employee retention rates, maintaining attrition rates as low as 1%. This success can be attributed to their focus on employee satisfaction, work culture, and growth opportunities.
Unicorns like Ather Energy, Druva, and Dream Sports also prioritized retention, achieving attrition rates below 2%. These companies serve as benchmarks for effective workforce management in the startup ecosystem.
Hiring Surge in March: A Positive Indicator
The hiring surge in March 2024 marked a positive indicator for the Indian startup ecosystem. Unicorns like Paytm, BigBasket, and PB Fintech ramped up hiring, reflecting their confidence in business growth. This trend indicates that Indian startups continue to expand and create opportunities despite market challenges.
Challenges and Opportunities Ahead
Indian unicorn startups face a dynamic landscape, with both challenges and opportunities shaping their workforce trends. Layoffs and closures underscore the need for resilience and adaptability. At the same time, hiring surges and high employee retention rates highlight the ecosystem’s potential for growth and innovation.
The focus on efficient human capital utilization will remain crucial as startups navigate market complexities. Unicorns that prioritize employee engagement and align workforce strategies with business goals will lead the way in shaping India’s startup future.
Conclusion
The workforce trends among Indian unicorn startups reveal a complex narrative of growth, challenges, and resilience. While layoffs and closures have impacted the ecosystem, several unicorns have demonstrated their ability to grow and thrive. By leveraging efficient workforce strategies and fostering employee satisfaction, Indian startups can continue to drive innovation and contribute to the country’s economic growth.