Jobs in startupland shrink 30%; hikes fall amid funding freeze

As the funding winter grips Indian new-age tech, startups have turned conservative about hiring, with open job positions in these companies shrinking to about a third compared with the 2021 highs when capital was widely available, according to data from executive search firm Longhouse Consulting.

Also, employees at these companies are seeing only 10% annual hikes on the higher side, while many are even forced to take a 10% cut, show the findings shared exclusively with ET. Bonus and variable pay-outs have also been smaller this time compared with recent years, causing the dip.

The number of open job positions in these companies was about 200,000 during June 2022 to May this year, compared with 600,000 in the years earlier when disproportionate hikes and hirings were rampant in the sector, show Longhouse data.

This is going to get worse, according to Amshuman Das, cofounder and chief executive of Longhouse Consulting. “The actual slump will be seen in FY24, because hiring will be muted on a full year basis and open positions can be down by almost 80% by the end of the current fiscal.”


Many companies may have not given hikes or bonuses, therefore there is a dip of about 10% in take-home salary, Das said.

Discover the stories of your interest

The findings are validated by executive search firm Native, which says startups now are only hiring two or three for every 10 recruitments they had made in 2021, and that too in “mission-critical” roles.

Also read | Startups fire 9,400 employees between January- March, more cuts coming

“During peak funding periods, there wasn’t deep evaluation of candidates and employers were betting on potential success of individuals, which isn’t the case anymore. Further, energy spent by founders on mission-critical hires have gone up at least five to eight times in the current cycle,” said Shujat Ali, director, consumer technology practice, Native.

As startups get more conservative about hiring, hiring cycles have also increased from six weeks to eight weeks on average now, Longhouse data show.

But according to HR executives and founders ET spoke to, hiring cycles have gone up to even 15 weeks for critical roles, as companies want to be sure about who they want to get in.

“Founders are taking more time to be able to finalise on who they exactly want,” said Sanam Rawal, founding partner, MetaMorph, an HR consultancy that works with portfolio companies of funds such as Blume Ventures.

Late-stage, Senior roles

According to data from Longhouse, the number of open positions at late-stage startups has dropped by 75% compared with the pre-Covid levels of 2019. For early-stage companies, this dip is roughly about 55%.

“Late-stage companies are hiring focusing more on non-tech roles as the pressure continues to be on profitability, while early-stage folks are focussed more on building their products and finding the right fit,” Das said.

Hiring for new forays and ‘moonshot projects’ has come to a grinding halt, as focus moves towards initiatives contributing to core revenues and overall profitability of the firm, he said.

“It all boils down to the function of funding. All these companies are under tremendous pressure right now to cut burn. Money’s become extremely scarce in the market right now. Boards have also forced management to take a hard look at some of these experiments and pivots,” said Siddarth Pai, founding partner, 3one4 Capital, a venture capital firm based in Bengaluru.

The entire conversation is now about people who cannot be hired, or people whose wage expectation has far exceeded a startup’s wage capacity and, at times, about return on investment, Pai said.

Experts believe that companies are focusing on mid-senior hires in a bid to remain prudent in the long term.

“Hiring dips in junior level are high at about 70-75% because companies are no longer wanting to invest in training. Also, at senior levels, hirings is becoming very expensive and availability (of talent) is very low, therefore companies are hiring at mid-senior and then giving them room to grow as focus shifts from hyper-growth,” said Das.

Ali of Native said seven out of 10 requests coming to his company for hiring are for early-stage startups.

“There is also a worrying trend that companies are not building their teams in the current market as they are waiting and watching for layoffs to end and others to start hiring first,” he added.

Further, as focus continues to be on profitability, hiring has increased in functions such as the office of the chief financial officer, as focus is on individuals who can lead startups to profitability, rather than to an IPO, which was the endeavour for many two years back, Ali said.

SaaS, fintech buck trend

While there have been large slumps in overall hiring, software-as-a-service (SaaS) and fintech remain two areas which continue hiring. For fintechs, hiring is largely directed towards legal and compliance teams as the regulators turn up the heat.

Further, with early-stage investors still backing Indian SaaS and excitement increasing around enterprise tech, software companies have been steadily hiring.

“We are witnessing some positive outcomes as a SaaS startup which include a better candidate pool in the last two three years, and a higher acceptance as well as joining ratios,” said Khadim Bhatti, founder and chief executive at Whatfix.

Meanwhile, with the recent layoffs that have struck the Indian startup ecosystem, experts believe many will transition back to more stable jobs at multinational companies as startups continue to be vulnerable to the ongoing slowdown.

For all the latest Technology News Click Here 

 For the latest news and updates, follow us on Google News

Read original article here

Denial of responsibility! TheDailyCheck is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected] The content will be deleted within 24 hours.