Livspace Lays Off Employees in Shift Towards AI-Native Organisation

Livspace has laid off approximately 1,000 employees, accounting for nearly 12% of its total workforce, in a gradual internal reorganisation. The company stated that this decision is intended to foster its evolution into an AI-native organisation. However, this significant workforce reduction is also occurring in the context of limited external funding over the past four years and a lack of a definitive pathway to profitability.

While Livspace reported that 12% of employees would be affected, a source from Moneycontrol suggested that the actual figure could reach as high as 25%. Earlier this year, in March 2023, the company had already decreased its workforce by 2%, and in May 2020, approximately 450 employees were let go during the Covid-19 lockdowns.

Strategic Resource Allocation and AI Integration

In an official statement, Livspace clarified that the workforce reduction was not merely a reactionary measure for cost-reduction, but a “strategic reallocation of resources” aimed at deeper integration of AI and automation across its primary operations, which encompass sales, design, operations, and marketing.

Livspace noted that it has implemented advanced AI agents to take over numerous tasks previously executed manually. The company explained that this transition unfolded gradually over the past six months as they tested and implemented AI systems across different sectors, ensuring that service quality remained intact even as roles were phased out.

Leadership Transition at Livspace

In conjunction with these operational modifications, Livspace has also announced a leadership change. Co-founder Saurabh Jain has decided to step down after 11 years to explore personal opportunities.

Funding and Growth Overview

Established in 2014, Livspace has secured over $450 million in funding from various investors, including KKR, Jungle Ventures, and Venturi Partners. The company achieved unicorn status in 2022 after raising $180 million, primarily driven by KKR’s investment.

For the fiscal year ending in March 2025, Livspace reported revenue of Rs 1,460 crore, while achieving a 42% reduction in losses during that year. The company operates across India, Southeast Asia, and the Middle East.

Despite Livspace indicating that the layoffs are inherent to its transition towards becoming an AI-native organisation, it appears that the decision is influenced by more than just AI adoption. The prolonged absence of funding and the lack of a clear strategy for profitability appear to be the main drivers behind the workforce reductions.