We recently witnessed layoffs by most of the tech startups in the Indian market. Owing to the swelling loss, Snapdeal recently laid off 30 percent of its workforce, leaving many talented people in a fix and flooding the job market with 1000s of applicants with staggeringly high salaries. It is crucial to note that even today the tech giants of our country such as TCS or Infosys offer the fresh talent an annual remuneration as low as Rs. 3Lakhs, per annum; however, the scenario with the employees of Indian startups is in a stark contrast. The tech startups conveniently pay almost the double or triple of what the giants have to offer. Things were good until the time the startups didn’t have profitability issues or difficulty in raising more funds. However, financial crunches have hit the startups, and the result is a huge number of laid off employees. Now the ex-startup employees are finding it hard to find new jobs with their ridiculously high salary packages.
Most of the prospective employers are perplexed about this situation. They are regularly highlighting this complexity. As an Industry expert wrote on Likedin, “After receiving over 1,000 applications for jobs from Snapdeal or ex-Snapdeal employees, our experience is that, aside from exceptions, people were overpaid by approximately 1.5-3 times. No wonder why these startups are failing.”
The tale: What went Wrong?
The trampling of startup employees is a result of wrongly anticipated growth and a poorly-planned recruitment policy. However, the laid off employees have to bear the brunt of the ill strategies of startups.
During their good old days, the tech startups were in a neck and neck race to acquire clients, extend their operations to multiple cities and therefore, they hired plethora of young talent. To attract this talent and guard them against the high-risk involved in startups, the high salary packages were used as a way to get them onboard.
Along with a lucrative offer came a comfortable, casual working environment and striking stock options, thus startups became the preferred workplaces of the smartest minds in technology, especially of millennial population.
The above-explained scenario is one side of the coin. The other side contains the story of how the startups attracted the experienced lot of the industry for forming their senior management teams.
For leadership roles, the Indian startups pay gigantic packages to hire the best people from multi-billion dollar tech companies. Flipkart alone spent a whopping Rs. 300 crores on the packages of their top management in the year 2015-2016. Now, does the financial crunch of startups sound surprising?
The lofty salaries add pressure to the sliming opportunities of funding, therefore, resulting in frequent layoffs.
Though the startups go on a hiring spree, the prospective employees fail to look at the overall picture of the startup scene in India.
What is going on right now?
Four years ago, tech startups were sprouting up rapidly. They were aggressively hiring because of their comprehensive plans of expansion. Graduates were hired straight out of the cream of the Top campuses. The attractive packages that were offered during campus placements helped the startups get the same attention that the conglomerates get. But it was a short-lived scene; those same employees are now hunting for another job because their current employer’s mounting losses and their highly anticipated exit from the company will leave their future in jeopardy. In this whirlwind, the biggest obstacle for them isn’t their skills but their ridiculously high salaries.
The top executives of established firms have said the harsh truth. They have accepted that they avoid interviewing employees of the overpaying startups; they recognize their talent but cannot afford their ‘crazy’ salary expectations.
The salary bubble created by the startups has burst now, leaving the future of talented workforce lurking behind a obscure job scene.
The prestigious institutes that were once knocking on the doors of startups for campus placements are the ones currently barring them to recruit the brightest, young minds in technology. In 2016, IITs had banned 31 startups for revoking their job offers.
The loss of hope for the employees of startups isn’t only because of their maddeningly high salaries that are being refused by tech giants but also the growing number of entry-level engineers in the Indian market. The new breed of engineers is available for low salaries, giving another reason to the conventional tech companies to keep the laid off startup employees at a bay.