Krutrim Faces Turbulence: Third Round of Layoffs and Leadership Exits Shake Confidence

Krutrim, the ambitious Indian AI startup founded by Ola’s Bhavish Aggarwal, is going through yet another rough patch. Reports confirm that the company has initiated its third round of layoffs, accompanied by a string of leadership-level exits.

This is a blow to a startup that had generated significant buzz as India’s answer to the global AI wave. Positioned as a challenger to OpenAI and Google, Krutrim was expected to spearhead homegrown innovation in generative AI. However, the repeated layoffs are raising red flags about the sustainability of its strategy, internal culture, and financial planning.

Layoffs are always unsettling, but the fact that this is the third round in quick succession suggests systemic issues rather than isolated restructuring. For employees, it erodes confidence in leadership and future job security. For external stakeholders, including investors and customers, it signals instability at a time when the company should be scaling aggressively.

The leadership exits only add fuel to the fire. Senior executives leaving amid turbulence raises questions about alignment between vision and execution. In startups, leadership stability is often as important as funding, since it creates confidence among teams and investors alike.

These developments also reflect a larger trend in the AI and startup ecosystem: the mismatch between hype and operational reality. Building large-scale AI models and infrastructure requires massive capital, long-term patience, and steady leadership — luxuries many startups find hard to secure.

If Krutrim doesn’t address these perception and execution gaps quickly, it risks being branded as yet another “overpromised, underdelivered” story in India’s tech landscape.

How AceNgage Sees This News

From AceNgage’s perspective, Krutrim’s story is a case study in how not just product, but people strategy, determines success. In our experience, employees who join ambitious startups often do so for the excitement of building something transformative. But repeated layoffs without clear communication can shatter that motivation, leading to disengagement and distrust.

Leadership exits add a cultural dimension: they often reflect either misalignment of values or the absence of a shared roadmap. For employees, this is unsettling because it creates the perception of a rudderless ship. For a company positioning itself as India’s AI future, credibility hinges not just on technology, but also on the trust and stability of its people practices.

What Could Have Been Done Differently

• Transparent Communication: Instead of recurring layoffs, Krutrim could have consolidated its restructuring into one clear, communicated phase with honest reasoning.

• Leadership Visibility: Leaders should have been more present, engaging with employees during turbulence rather than exiting quietly.

• Redeployment over Layoffs: Identifying alternative roles or reskilling employees for other business functions could have reduced the perception of instability.

• Culture Building: Establishing a narrative that acknowledges challenges but highlights a long-term vision could have kept morale intact.

Conclusion

Krutrim’s third wave of layoffs and leadership exits is not just a financial story — it’s an employee engagement story. The future of AI in India depends on startups like Krutrim being able to balance ambition with sustainability. Unless the company invests in transparent communication, leadership consistency, and employee trust, it risks losing not just talent but also credibility in an industry where both are paramount.