Krutrim's Layoffs Cloud the Future of Its Next AI Model Launch Ola's Krutrim has already seen departures from several top executives in the recent months.

Krutrim, Ola's AI arm, has let go of nearly 50 employees in another round of mass layoffs.

So far, more than 200 employees have been reportedly laid off by the company. The last round of layoffs, which happened in July this year, saw the exit of more than 100 employees.

The latest round saw employees from the linguistic department being laid off. This included transcribers across regional languages including Punjabi, Bengali, and Malayalam, among others.

Entrepreneur India has reached out to Krutrim for a statement. We will update the story as soon as we hear from them.

The company, however, has told Economic Times that the layoffs were actually part of a strategic realignment.

"The current phase of the data annotation project involving in-house linguistics has been successfully completed," a spokesperson noted, is quoted as saying.

High profile exits and impact

Apart from laying off employees, Ola's Krutrim has seen several high profile exits in the recent months. Management-level exits are not new in the startups space but generally indicate either a larger strategic realignment or multiple issues within the organisation.

It's worth noting that at least six senior executives have left the company since April this year. This includes heads of software engineering, corporate finance, cloud architecture, and AI data.

In FY25 alone, the company saw more than 20 exits, according to an Entrackr report.

High level exits may also have an impact on the market performance of the company services namely Krutrim Cloud. Senor Tower data reveals its AI assistant app Kruti has been downloaded 270,000 times since June.

An ET report in June said that the company's LLMs and cloud products received a "tepid response" from the industry. The primary reasons for the slow uptake was the poor documentation of products and technical maturity. The report also highlighted that some companies had switched to Amazon and other legacy service providers.

Krutrim, however, promised enhancements in the coming future.

"The layoffs and leadership exits are a textbook sign of a company struggling. It could be either finding the right market fit or just internal issues. The company may have burned cash to onboard a large linguistics team to support the AI model. However, the layoffs hint that the company may have chosen to go with a leaner team to build the model. It remains to be seen how the layoffs and exits of the leadership team affect the market perception as well the performance," a senior VC based out of Mumbai told Entrepreneur India on condition of anonymity.

"A stable team with clear objectives and timelines can definitely help the company bounce back," the VC added.

Krutrim's rise and challenges

Led by Ola's Bhavish Aggarwal Krutrim was quick to gain traction among the investors as it was pitched as India's answer to the global LLMs.

In January 2024, Krutrim raised a significant funding round of $50 million, led by Matrix Partners India, at a valuation of USD 1 billion. This launched Krutrim into India's unicorn club. In December 2024, Aggarwal pledged his Ola Electric shares to secure debt funding for Krutrim. There were reports that the AI firm was looking to raise another USD 300 million.

Krutrim in its early days faced wide criticism as the AI failed to answer responses correctly and faced multiple issues. The company then promised to fix these issues in the future.

At present, the company is working on a multibillion parameter model, called Krutrim 3. The company has also teamed up with tech firms such as Lenovo and Cloudera. Reports, however, hint that the recent layoffs and departures could jeopardize the release of the model.

It is worth highlighting that the company is also testing what it calls "India's first domestically designed and manufactured chips", Bodhi. The company aims to deploy the chip for AI training by 2027-28, a company executive said earlier this year.

Entrepreneur India has asked the company about the timeline for the release of Krutrim 3.

"Building a moonshot company is difficult. Ola [Krutrim] are now deep in this. Though the firm is heavily funded considering the Indian startup ecosystem benchmarks, it may still require more capital to build products that are on par, if not better, with the global counterparts. The kind of projects the Ola team are pursuing are anyway capital intensive and I am sure VCs do understand the high-risk," a VC with investments in mobility firms told Entrepreneur India.