Livspace Layoffs: When AI Adoption Forces 1,000 Employees Out and a Co-Founder to Walk Away
Bengaluru-based home décor platform Livspace has laid off around 1,000 employees as part of what they’re calling an AI transformation. But here’s the thing: this isn’t just another tech layoff story. When roughly 12 per cent of the company’s workforce disappears and a co-founder exits simultaneously, you know something deeper is happening beneath the surface of corporate speak.
We’re watching the home interior design startup layoffs phenomenon unfold in real time, and it’s raising uncomfortable questions about whether companies are genuinely transforming or just using artificial intelligence as justification for cost cuts they wanted to make anyway.
Understanding the Scale of Livspace Layoffs
The Livspace 1000 employees laid off development happened over six months, not overnight. The spokesperson noted that the layoffs took place over the last six months as they tested AI systems across various departments. This phased approach tells us something important: they weren’t panicking about cash flow. Instead, they were methodically replacing human workers with machines.
Think about that for a moment. Over half a year, team members watched as tasks that were previously manual are now handled by intelligent systems in design, sales, operations, and marketing. The Livspace workforce reduction wasn’t a sudden shock—it was a slow-motion transformation that workers saw coming but couldn’t stop.
However, reports conflict on the actual numbers. While Livspace claims the Livspace job cuts affected 12% of staff, a report by Moneycontrol claimed the figure could be as high as 25%. That discrepancy matters tremendously when we’re talking about people’s livelihoods.
The Livspace Co-Founder Saurabh Jain Exits: Timing That Raises Eyebrows
Right in the middle of these massive Livspace layoffs, Co-founder Saurabh Jain has exited the firm after more than a decade. Jain joined Livspace in 2015 following the acquisition of his startup DezignUp and later rose to the position of Chief Business Officer in 2022.
The timing feels suspicious, doesn’t it? Amid the job cuts, the startup’s cofounder and India CEO Saurabh Jain also quit to pursue “personal interests”. As per the startup, Jain helped lay the groundwork for Livspace’s AI avatar. So he built the system that replaced a thousand workers, then walked away to “pursue personal interests”?
While the company frames Jain’s exit as a “natural transition” to pursue personal interests, the timing—amidst a massive workforce reduction—has raised eyebrows across India’s tech ecosystem. The Saurabh Jain Livspace departure represents more than just another leadership change—it signals potential disagreement about the company’s direction or perhaps discomfort with the human cost of automation.
Decoding the “AI Native Organization Livspace” Strategy
Livspace loves talking about becoming an AI native organization Livspace. A spokesperson told Moneycontrol, “As we look at the next phase of our growth, we are fundamentally reorganizing our internal operations to become an AI-native agentic organization”.
But what does that actually mean for workers? Let’s break down the Livspace AI shift:
Design automation: AI-powered tools are now handling mood boarding and 3D rendering, allegedly slashing concept-to-visualisation time by 60%. Designers who spent years honing their craft are now competing against algorithms that work faster and never sleep.
Sales transformation: Automated lead-scoring systems and AI voice agents are now managing the “top of the funnel,” replacing human tele-callers and sales assistants. Those warm, personalized conversations? Now handled by bots.
Operational efficiency: Predictive AI systems are taking over supply chain management and project tracking to reduce manual oversight. The people who used to solve problems with experience and intuition? Replaced by algorithms following patterns.
The Real Reason for Livspace Layoffs: AI or Economics?
Here’s where the Livspace company news gets messy. The official line emphasizes innovation. While workforce reductions are often linked to financial pressures, Livspace has clarified that the decision is strategic rather than reactive. Addressing concerns, the company spokesperson said, “To be clear, this isn’t a reactive cost-cut. It’s a strategic reallocation of resources”.
But financial data tells a different story. Livspace’s revenue increased by 23 per cent to Rs 1,460 crore in FY25. At the same time, its losses narrowed significantly to Rs 242 crore, compared to Rs 416 crore in the previous year. Revenue is growing and losses are shrinking—that’s the definition of a company improving financially.
Yet there’s another uncomfortable truth: the massive layoffs also come amid a lack of external funding over the past four years and the absence of a clear roadmap to profitability. The Livspace funding challenges are real. Despite raising over $450 million, they haven’t secured significant new investment recently.
So which is it? Strategic AI transformation or financial necessity masked as innovation? Probably both. While Livspace said the layoffs are part of its shift to becoming an AI-native organisation, the move does not appear to be guided by AI adoption alone. The prolonged lack of funding and the absence of a clear path to profitability seem to be key factors behind the workforce reduction.
Livspace Leadership Change and the Broader Indian Startup Layoffs Trend
The Livspace leadership change happening alongside workforce reduction mirrors a troubling pattern. The broader tech ecosystem has witnessed similar shifts, with companies such as Amazon, Microsoft, TCS, and Accenture announcing layoffs in recent months as they accelerate AI adoption.
We’re seeing a wave of Indian startup layoffs justified by automation. India – 920 layoffs just in early 2026 according to tracking data. But India’s tech sector faces unique pressures. In the fall of 2025, IT behemoth Tata Consultancy Services, widely considered to be India’s largest private-sector employer, cut nearly 20,000 jobs in its biggest ever layoffs as part of an AI-driven overhaul. Several other outsourcing companies followed suit, also citing AI realignment. Various startups, including Krutrim, cited AI disruption as they laid off more than 6,000 employees in 2025.
This context makes the Livspace situation less exceptional and more representative of a troubling trend across home interior design startup layoffs and beyond.
What History Tells Us: Livspace’s Pattern of Job Cuts
This isn’t Livspace’s first rodeo with layoffs. Livspace had previously reduced its workforce by 2% in March 2023, and in May 2020 laid off around 450 employees amid Covid-19 lockdowns. Each time, circumstances differed, but the pattern remains: when pressure mounts, headcount drops.
In 2023, nearly 100 employees were let go. Earlier, in 2020, more than 400 roles were eliminated as the startup worked to improve profitability and operational efficiency during challenging market conditions. The current cuts dwarf previous reductions, suggesting escalating urgency around achieving profitability.
The Human Cost Behind the AI Transformation
Let’s talk about what often gets lost in discussions about efficiency gains and strategic reallocations: actual human beings losing their jobs.
Critics and former employees point out that while AI can render a 3D room in seconds, it cannot yet replicate the nuanced empathy required when a homeowner is making the biggest emotional and financial investment of their life. Interior design isn’t just about measurements and color schemes—it’s about understanding dreams, anxieties, and family dynamics.
Workers across multiple verticals including design, sales, operations, and marketing have seen their roles phased out as AI systems assume more responsibilities. These weren’t just “manual” jobs—they required judgment, creativity, and emotional intelligence.
The broader context makes this even more concerning. Entry-level salaries had increased by less than 10% over the previous 15 years, while costs of education, food, and housing rose exponentially. The number of students at Indian engineering colleges is continuously increasing, but there are fewer and fewer tech jobs. Young professionals entering the workforce face a brutal reality: AI is eliminating positions faster than the economy creates new ones.
AI Washing or Genuine Transformation?
OpenAI founder Sam Altman, who is in India for the ‘India AI Impact Summit 2026’, said yesterday that there is a growing trend of blaming AI for job cuts. While acknowledging that AI is displacing jobs, he said many companies are using it as a veil for routine cost-cutting. “I don’t know what the exact percentage is, but there’s some AI washing where people are blaming AI for layoffs that they would otherwise do”.
That quote feels particularly relevant to the reason for Livspace layoffs. Companies have always needed to cut costs and streamline operations. AI just provides a more palatable narrative than “we need better margins for investors.”
With Livspace not having raised significant external funding in nearly four years, the “AI shift” also appears to be a necessary maneuver to narrow losses and find a path to profitability in a “funding winter”. When you can’t raise more money, you have two options: increase revenue or decrease costs. Livspace chose both, using AI as the mechanism for the latter.
What This Means for the Future of Work
Despite the company’s upbeat framing, the move highlights the harsh reality of the 2026 job market. As discussed at the recent India AI Impact Summit, the debate is no longer about if AI will replace jobs, but how fast.
The global tech sector is experiencing unprecedented transformation. So far in 2026, there have been 112 layoffs at tech companies with 40,132 people impacted. We’re averaging 787 job losses per day globally in the tech sector alone.
India is still looking at a massive shift in the job market with growing AI adoption. As a result, training and skilling of employees will need to rapidly transform to getting the workforce ready for an AI-coworker environment. According to Cornerstone Ventures’ managing partner Abhishek Prasad, upskilling the workforce in AI is equally challenging for employers.
The question isn’t whether AI will change work—it already has. The question is whether we’ll manage this transition in ways that protect worker dignity and create new opportunities, or whether we’ll simply optimize for corporate efficiency at human expense.
The Gamble: Will Livspace’s Strategy Pay Off?
Livspace’s move is a gamble. If they successfully maintain service quality with a skeleton human crew, they set a new blueprint for the interior design industry. If they fail, they risk becoming a cautionary tale of “over-automation.” For the 1,000 professionals now looking for work, the message is clear: the future of work isn’t coming—it’s already here, and it’s written in code.
Financial performance will be the ultimate judge. With revenue of INR 1,460 crore and reduced losses by 42% in FY25, Livspace’s numbers are trending in the right direction. But maintaining growth while replacing experienced humans with untested AI systems carries enormous execution risk.
The sheer scale of the layoffs, impacting diverse departments from design to marketing, raises questions about potential knowledge loss and the capacity for seamless AI integration without compromising service quality or innovation. You can’t just fire your institutional knowledge and expect algorithms to fill the gap.
Looking Ahead: What’s Next for Livspace and Its Workers
For the company: continued AI integration, hopefully sustainable growth, and validation that this painful transformation was worth it. For Livspace, the restructuring is projected to continue as AI systems take on larger operational responsibilities and the company seeks new growth opportunities. With a renewed focus on automation and technology, Livspace hopes to improve its position in the home interiors industry.
For the 1,000 laid-off workers: uncertainty, job searches in a competitive market where AI skills are increasingly mandatory, and the challenge of pivoting careers in an economy that’s rapidly changing beneath their feet.
For the industry: a test case. Other home interior companies are watching closely. If Livspace succeeds, expect copycats. If they stumble, expect competitors to poach their displaced talent and position themselves as the “human touch” alternative.
The Livspace layoffs represent more than 1,000 job losses and one co-founder’s exit. They’re a microcosm of the broader tension between technological progress and human welfare, between corporate efficiency and worker security, between the future we’re building and the people we’re leaving behind.
Only time will tell whether Livspace’s bet on AI pays off. But for the thousand workers who lost their jobs and the co-founder who walked away, that future is already here—and it’s not nearly as optimistic as the company’s press releases suggest.
Frequently Asked Questions
How many employees were affected by the Livspace layoffs in 2026?
Livspace laid off approximately 1,000 employees, representing about 12% of its total workforce according to company statements, though some reports suggest the figure could be as high as 25%. The layoffs occurred over a six-month period across departments including design, sales, operations, and marketing as the company transitioned to an AI-driven operational model.
Why did Livspace co-founder Saurabh Jain leave the company?
Saurabh Jain, who had been with Livspace since 2015 and served as Chief Business Officer, stepped down to pursue personal interests according to official statements. However, the timing of his departure—coinciding with the layoff of 1,000 employees during a major AI transformation—has raised questions about potential disagreements regarding the company’s strategic direction and the human cost of automation.
What is the real reason behind the Livspace layoffs?
While Livspace officially positions the layoffs as a strategic transformation to become an “AI-native agentic organization,” multiple factors appear to be at play. The company has experienced a lack of external funding for nearly four years and still hasn’t achieved profitability despite narrowing losses. Industry observers suggest the layoffs combine genuine AI adoption with necessary cost-cutting measures to improve financial performance and extend runway in a challenging funding environment.
How does the Livspace situation fit into broader Indian startup layoffs?
Livspace’s workforce reduction is part of a larger trend of Indian startup layoffs driven by AI adoption and funding challenges. In 2025, major IT firms like TCS cut nearly 20,000 jobs citing AI-driven overhauls, while various startups laid off more than 6,000 employees. The pattern reflects a broader shift in India’s tech sector toward automation, operational efficiency, and profitability over growth-at-all-costs.
What AI technologies is Livspace implementing to replace workers?
Livspace has integrated AI agents and automation across core functions including design (AI-powered mood boarding and 3D rendering), sales and marketing (automated lead-scoring and AI voice agents), and operations (predictive AI for supply chain management and project tracking). The company claims these systems can handle tasks previously performed manually, though critics question whether AI can replicate the emotional intelligence and nuanced judgment required in home interior design.
Is Livspace financially struggling despite the revenue growth?
Livspace presents a mixed financial picture. Revenue increased 23% to Rs 1,460 crore in FY25, and losses narrowed from Rs 416 crore to Rs 242 crore. However, the company hasn’t raised significant external funding in nearly four years and still lacks a clear path to profitability. The layoffs appear designed to accelerate the journey to profitability while managing cash burn in the absence of new investment.
What does this mean for the future of jobs in India’s tech sector?
The Livspace layoffs exemplify a broader transformation in India’s job market where AI adoption is eliminating positions faster than new roles are being created. With entry-level tech salaries barely increasing over 15 years while living costs soar, and engineering graduates facing fewer job opportunities, workers must continuously upskill to remain relevant. The shift emphasizes that AI expertise and adaptability have become survival requirements rather than career advantages in India’s evolving tech landscape.
