After enduring a prolonged funding slowdown and widespread layoffs, India’s startup ecosystem is showing signs of hiring recovery.
According to recent data from staffing firms Xpheno and TeamLease Services, startups are expected to add 80,000 new tech jobs in FY26, marking a return to pre-downturn hiring levels.
This rebound is driven by a shift in hiring strategy—from aggressive headcount expansion to leaner, skill-based teams focused on sustainable growth.
The total tech workforce in funded startups is projected to grow from 5.9 lakh in FY25 to 6.7 lakh by FY26, reflecting a net addition of 80,000 professionals.
Employment Outlook: Sector-Wide Trends
The Employment Outlook Report by TeamLease reveals a Net Employment Change (NEC) of +6.9% for the first half of FY26, down slightly from +8.9% in H2 FY25.
Despite this moderation, 69% of employers in the startup and tech sectors plan to expand their workforce, while only 12% anticipate reductions and 19% expect no change.
Hiring momentum is strongest in sectors such as:
- Quick commerce
- Fintech (payments, lending, credit)
- E-retail and marketplaces
- Food & Beverage retail
These segments are driving demand for specialized tech talent, particularly in DevOps, product management, and full-stack development.
Skill-Based Hiring Takes Center Stage
Startups are prioritizing experienced professionals with expertise in AI, data analytics, cybersecurity, and cloud computing.
Entry-level hiring has declined, as companies seek outcome-oriented skill sets over volume-based expansion.
While fresh graduates remain relevant in cost-sensitive sectors like fintech, mid-level professionals with 3–5 years of experience are in high demand for roles involving AI/ML, cloud engineering, and data science.
Tier-2 and Tier-3 Cities Fuel Expansion
Geographic diversification is playing a key role in the hiring resurgence.
Tier-2 and Tier-3 cities, which now host over 51% of DPIIT-recognized startups, are emerging as attractive hubs due to:
- Lower operational costs
- Digitally skilled talent pools
- Reduced attrition rates5
Cities like Bengaluru, Mumbai, and Chennai continue to lead hiring activity, but smaller cities are gaining ground as startups expand beyond traditional tech centers.
AI’s Dual Impact on Hiring
Artificial Intelligence is reshaping hiring dynamics.
While it’s creating new roles, it’s also automating routine tasks, putting pressure on entry-level jobs and moderating salary expectations for less experienced professionals.
Companies are now hiring talent that can leverage AI for innovation and efficiency, rather than simply expanding headcount.
Strategic Shift: From Scale to Sustainability
Industry leaders note a clear shift in mindset.
Kartik Narayan, CEO of Staffing at TeamLease, emphasized that startups are moving away from hyper-growth models to value-driven business strategies.
The focus is on building agile teams that can deliver faster innovation and better customer experiences.
This strategic pivot is expected to strengthen India’s digital economy and create a more resilient startup ecosystem.
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