Bhavish Aggarwal's AI startup, Krutrim, has initiated another round of layoffs, affecting 20 to 25 employees from its product and engineering teams. This recent reduction constitutes nearly half of the company's remaining workforce and marks the second such exercise this year. The move is part of a broader organizational restructuring as the AI unicorn continues to refine its business strategy and operational focus.
Strategic Realignment and Workforce Reduction
In response to the changes, Krutrim stated it is scaling operations and periodically reviews its team structure to align with evolving priorities. This latest round follows previous cuts that significantly reduced its sales, go-to-market, and business operations teams. These successive restructuring exercises have seen the company's total headcount shrink dramatically from over 550 employees last year.
The workforce adjustments coincide with a significant pivot in the company's core mission, moving away from building a full-stack AI ecosystem. Krutrim has scaled back its ambitions of developing indigenous large language models and semiconductor capabilities. Instead, the startup is now concentrating its efforts on providing AI cloud infrastructure and enterprise services through its Krutrim Cloud and Maps platforms.
Financial Performance Amidst Internal Dependencies
Despite the internal turmoil, Krutrim reported positive financial momentum, with revenues crossing ₹300 crore in FY26 and its first annual net profit. This growth follows its achievement of unicorn status in 2024 after securing a $50 million funding round led by Matrix Partners India. The figures suggest its strategic shift towards enterprise services is beginning to yield commercial results.
However, a closer look at its revenue composition reveals a heavy dependence on its parent ecosystem. Reports indicate that approximately 90% of Krutrim's operating revenue in the previous fiscal year came from Ola Group companies. This reliance raises questions about the startup's ability to attract a substantial base of external enterprise clients for long-term sustainability.
Internal Challenges and Employee Concerns
The restructuring has also brought employee grievances to the forefront, with several staff members alleging significant operational issues. Multiple employees have reported that reimbursements for work-related expenses have remained unpaid for over five months. There are also claims of delays in final settlements and leave encashments for former employees, with some dues being cleared in installments.
These internal difficulties are unfolding against a challenging backdrop for the broader Ola Group. Ola Electric has experienced a decline in its market share over the past year, and its stock value has fallen considerably since its listing. This context suggests wider operational and financial pressures are influencing the strategic decisions being made at Krutrim.
Krutrim is navigating a critical phase of transformation, marked by a narrowed strategic focus, significant workforce reductions, and internal operational hurdles. While the company's pivot to AI cloud services shows early signs of profitability, its heavy reliance on the Ola ecosystem remains a key challenge. The startup's future success will ultimately depend on its ability to build a diverse external client base and stabilize its internal operations.