Ola's Krutrim reverses course, lays off 100+ employees hired recently

In a significant and abrupt reversal, Krutrim, the artificial intelligence startup founded by Ola's Bhavish Aggarwal, has laid off over 100 employees, a substantial portion of whom had been hired just within the last six months.[1] This move, which follows a smaller round of job cuts in June, has sent ripples through the Indian AI sector, raising questions about the ambitious startup's strategy and the intense pressures of the rapidly evolving AI landscape.[2][3][4] The layoffs predominantly impacted the company's linguistics division, a team that had been rapidly scaled up to support Krutrim's mission of building AI models tailored for the diverse languages and cultural nuances of India.[3]

The recent workforce reduction is being framed by the company as a "strategic realignment" to create "leaner, more agile teams" in line with evolving business priorities and the efficient deployment of capital.[1][5] This corporate restructuring comes shortly after the June launch of Krutrim's AI assistant, Kruti, which is designed to be a homegrown competitor to global giants like OpenAI's ChatGPT and Google's Gemini.[6][2] A source familiar with the matter suggested that with approximately 80% of the training for the AI assistant completed, the company's immediate need for a large team of linguists has diminished.[2][7] The linguistics team, which had reportedly grown to around 600 employees, was focused on training and evaluation across 10 Indian languages, including Tamil, Telugu, Odia, and Marathi.[6][3][1] Many of the affected employees had relocated to Bengaluru for these full-time roles, only to find their positions eliminated months later.[3][1]

This sharp course correction points to a confluence of challenges facing the nascent AI unicorn. Reports indicate that Krutrim has been grappling with stalled fundraising efforts, lower-than-expected product traction, and significant leadership churn.[6][3] The company, which achieved unicorn status in early 2024 after a $50 million funding round from Z47 Partners, had initially aimed to raise a much larger sum, a target that was later reduced due to tepid investor interest.[2][3][8] This financial pressure is compounded by the struggle of its large language model and cloud services to gain a foothold against the more established offerings of global hyperscalers.[3] The situation has not been helped by a series of high-profile executive departures over the past year, with close to a dozen senior leaders exiting in 2024 and more following in early 2025.[3][1][9]

The implications of Krutrim's layoffs extend beyond the company itself, offering a stark illustration of the volatile and capital-intensive nature of the AI industry. The move to rapidly hire and then just as quickly downsize a specialized team highlights the strategic pivots startups must make in response to product development cycles and market realities. While Krutrim publicly maintains its long-term vision to build India's "own full-stack AI platform," the recent events underscore the immense difficulty of competing with deeply entrenched global players.[1][10] The company's initial strategy to build a large in-house team for language data training appears to have been supplanted by a leaner approach, a decision likely driven by a combination of financial constraints and the maturation of its initial AI models.[2][7]

Ultimately, Krutrim's decision to shed a significant portion of its newly hired workforce serves as a cautionary tale for the burgeoning Indian AI ecosystem.[8] It reflects a broader trend in the tech industry of prioritizing efficient capital deployment and resizing teams amid economic uncertainties.[2] While Bhavish Aggarwal has articulated a bold, nationalistic vision for Krutrim, pledging significant investment to create a self-reliant AI powerhouse, the path to achieving this ambition is proving to be fraught with challenges.[2][3][11] The company's ability to navigate funding headwinds, retain top talent, and demonstrate clear product-market fit will be critical to its long-term survival and success in the hyper-competitive global AI race.