The layoffs, which accounted for about 30% of the startup’s workforce, were carried out in multiple phases and largely affected engineering and product teams
This was not the first round of layoffs in 2025; Yellow.ai had also cut around 40–50 jobs in August
Without confirming the number of employees laid off, Yellow.ai attributed the exercise to the change in enterprise AI landscape with the emergence of agentic AI technologies
Conversational AI startup yellow.ai has laid off more than 100 employees over the past few weeks amid rising automation, sources told Inc42. The layoffs affected about 30% of the startup’s workforce.
The job cuts were carried out in multiple phases and largely affected engineering and product teams, the sources said. The startup has also deferred or cancelled salary increments and appraisals for the past two years, they added.
Notably, this is not the first round of layoffs at the Bengaluru-based startup this year. According to the EPFO data, Yellow.ai also reduced its headcount in August, when around 40-50 employees were let go.
Responding to Inc42’s queries, a spokesperson of Yellow.ai said in a statement, “The enterprise AI landscape has fundamentally transformed with the emergence of agentic AI technologies. Like many technology companies, we’ve made difficult but necessary workforce adjustments as part of our transition to an agentic AI platform.”
Without giving the exact number of employees impacted by the layoffs, the statement said that the technology shift from conversational AI to autonomous agents has changed both how its customers use the product and how the startup builds and supports it, “requiring fewer people to build, implement and support it”.
The startup it “realigned” its team to focus on the specialised skills needed for agentic AI development and deployment, while reducing roles that were oriented toward “legacy implementation and support models”.
Notably, Yellow.ai’s India entity saw its revenue decline marginally to INR 233.6 Cr in FY25 from INR 237.9 Cr in the previous fiscal year. Its employee benefit expenses decreased 23% YoY during the year, indicating continued cost-cutting efforts.
However, the startup said in the statement that it saw strong consolidated global growth of about 40% in FY25, with its “North American market expanding nearly 90%”. It didn’t share its consolidated revenue number.
The auditor’s report of its India entity for FY25 also flagged non-compliance with FEMA regulations, without specifying the nature of the transactions involved.
Responding to this, Yellow.ai said that it was a procedural, timing-related matter involving foreign currency advances from its holding company that remained unutilised beyond specified periods under FEMA regulations.
“There are no financial irregularities or unauthorised transactions. We have already initiated formal proceedings with our authorised dealer (AD) bank to regularise these unutilised advances in accordance with FEMA provisions. Management is confident that these administrative delays will be regularised without any material fine or penalty,” it said.
Founded in 2015 as Yellow Messenger, the startup initially built a location-based messaging platform that enabled users to discover nearby businesses and interact with them in real time.
However, cofounders Rashid Khan, Jaya Kishore Reddy Gollareddy, and Raghu Ravinutala soon decided to move away from the consumer-facing model due to limited scalability and heavy manual effort in handling customer queries.
By 2017, the startup adopted a platform-led approach, allowing enterprises to build and manage chatbots and escalate conversations to human agents when required. It later rebranded as Yellow.ai in 2021 as it expanded into generative AI-led customer service automation.
Headquartered in San Mateo, California, Yellow.ai claims to serve over 1,100 enterprises across 85 countries, offering products across 35 text and voice channels and supporting 135 languages. It claims to automate more than 16 Bn conversations annually on its platform.
It operates across key markets such as North America, APAC and the Middle East, and has been expanding in the UK, Europe and Latin America. Its client list includes names such as Sony, Domino’s, Hyundai, Volkswagen, Decathlon, Randstad, Singapore Airlines’ Pelago and Lulu Group International.
Over the years, the startup has raised more than $102.1 Mn in funding from the likes of Westbridge Capital, Lightspeed Venture Partners and Salesforce Ventures.
Yellow.ai competes with players such as Gupshup, Reliance-owned Haptik and Verloop. Notably, in September this year, Inc42 reported that Gupshup also laid off more than 100 employees.