Thrifty Indian Startups Eye Local Talent
The days of extravagant offers for global talent are gone as cos come under pressure to tighten purse strings
Sreeradha D Basu & Devina Sengupta
Mumbai: Startups in India are no longer rushing to splurge up to $700,000 a year on executives from abroad. The number of such offers has dried up as much as 60-70% in the past few months, according to headhunters, who said the drive to contain costs has forced startups to rely mainly on local talent for filling senior positions. The cutback has been the sharpest at bigger firms such as Flipkart, Snapdeal and Zomato, headhunters said.
ET spoke to more than eight hiring firms including RGF Executive Search, Longhouse Consulting, EMA Partners, Transearch, The Head Hunters, Michael Page India, Heidrick & Struggles and Basil Advisors.
“A company that would hire seveneight (executives) from abroad has slashed its hiring to two-three at the most,” said Anshuman Das, managing partner of search firm Longhouse Consulting, which specialises in e-commerce recruitment.
Gone are the days, Das said, when bigger e-commerce players would hire even vice presidents for .₹ 1-1.5 crore plus stock options that would be worth another .₹ 1 crore a year.
“There was a lot of noise on e-commerce companies hiring from abroad and though not all were successful, at least they were entertained. Now even for that entertainment there is no money,” he said.
The shift is also because investors want companies to focus on unit economics and not products as was the case earlier. Therefore, demand for technology specialists has come down, recruiters said. “A couple of years ago, one expected e-commerce in India to grow the same way that it did in the West. Firms hired those who have been part of the growth in the West. However, that growth did not happen in India and therefore the global recruitments had to be stopped,” said Vinod Murali, managing director of InnoVen Capital India, a venture capital debt fund.
At another executive search firm, The Head Hunters, CEO Kris Lakshmikanth, who was making three trips to the US till last year to recruit talent, said firms have clamped down on such hiring. “The odd
one that happens now, clients want within $200,000. The best talent is way beyond the budgets in today’s ecommerce scenario,” he said.
Such executives were earlier hired at highs of $600,000-700,000 and more, including ESOPs. Earlier, Lakshmikanth said, the founder of a big ecommerce firm would ask him to shortlist at least half a dozen candidates from Google and Amazon’s US offices for his key team. Now such demands have dried up, he said.
Just a year ago, startups in India were offering matching dollar salaries and fast-track career opportunities to lure talent from the Silicon Valley. An ET story in 2015 had highlighted how two of Google’s engineering vice-presidents–Peeyush Ranjan and Punit Soni – relocated from San Francisco Bay Area to Flipkart
at $5-6 million annual packages.
Punit Soni, chief product officer of Flipkart quit earlier this month. Peeyush Ranjan and Saikiran Krishnamurthy, two other high-profile executives recruited from abroad still with Flipkart and have been assigned additional responsibilities.
Flipkart declined to comment on emailed queries from ET.
The shift has led to grooming of more local executives who can take up senior posts. In case of recruitments from abroad, employers are now looking at people with lower experience levels and therefore lower salaries as well. Nilay Khandelwal, regional director at Michael Page India said the younger startups and e-commerce firms still prefer their top candidates from the Bay Area but are now increasingly hiring on contracts which can be renewed at the employer’s discretion.
There are reports of job cuts, resulting from the rapid automation being introduced at leading startups to handle routine tasks. In the backdrop of this slump, big-ticket recruitments are being avoided.
Basil Advisors’ founder Prateek Srivastava said hiring decisions are being deferred and time taken to close a hire stretched. In a few cases, he said, executives from abroad have been hired on contracts stipulating a certain number of hours per week, where they are allowed to work for other employers as well.
Geetika Mehta, director-human resources at Urban Ladder said, “We hire candidates based on fitment of skill sets from a role and culture perspective. In the last few months, we have not seen any talent from global markets relevant for us. However, a number of employees in our tech team are from Bay area.”
Employee costs at leading startups account for about 35% of overall cash burn rates, say industry analysts. Instead of enticing with money and growth, clients are now asking the search firms to bring in only those who are keen to return to India anyway, said GC Jayaprakash, executive director at RGF Executive Search. Recently, when a potential hire from the Silicon Valley said he would think about relocating if the offer was exciting enough, the company told RGF to let go of the chase.