Funding Freeze Puts Startup Hiring in Cold Storage
Ecomm, logistics, grocery and food delivery startups worst affected
Bengaluru: The prolonged funding winter bearing down on Indian startups could leave several companies with bare branches.
Hiring at startups this year has dropped by10-50%, according to recruitment companies that hire for startups.
This is particularly true for ecommerce, logistics, grocery and food delivery companies, typically large recruiters that have put a freeze on hiring or are laying off employees because of their present inability to secure funds, the recruitment firms said. Financial-technology companies are perhaps the only exceptions, thanks to India’s digitisation drive.
This hiring depression after frenzied recruitment drives in recent years could take the shine off startups and make it tough to attract top talent from larger companies and India’s best business and engineering schools. Startups need the best and experienced minds now more than ever as they retreat to focus on technology and business innovations.
“We were getting about 100 requisitions a month from startups for senior and midlevel hiring 12 months ago. Today, we get a maximum of 3040,” said Joseph Devasia, managing director for India at Antal International, which works with more than 50 startups.
Recruitment companies Kelly Services India and PeopleStrong peg the drop in startup hiring in the past few months at a less severe 10%. “With investors now asking companies to focus on profits and cut down on spends, hiring managers are more cautious,” said Thammaiah BN, managing director at Kelly Services.
While hiring at the mid and lower levels is particularly down, what is more worrying is the inability of startups to recruit senior executives, according to the recruitment firms. Mandates by internet firms for hiring senior executives dropped by 30-40% between October and December, said Ashish Sanganeria, partner at executive search firm Longhouse Consulting. “Among the top 10 ecommerce companies, there have been only 35-40 hires at the leadership level in the past six months, while the number was in triple digits in early 2016,” Sanganeria said. “Even when founders have wanted to hire a few people at senior positions, the decisions were scrapped at board meetings.”
ET contacted several ecommerce, logistics and delivery companies but did not get a response for this report.
A big worry is the recent spate of layoffs as companies seek to pare costs or, worse, pull down their shutters forever.
Startups in India let go about 9,200 employees last year, compared with about 5,500 in 2015, according to research platform Xeler8. Many of the layoffs were by food delivery, ecommerce and consumer services companies. Snapdeal is in the process of laying off at least 1,000 employees, ET reported this month.
FINTECH ON A HIGH
For all the gloom, financial-technology startups are on a hiring spree, basking in a rare spot of sunshine as India rushes to evolve into a largely digital economy.
“We are seeing more open positions in startups in the financial technology services sector post demonetisation across all three levels—senior, mid and entry,” said Rituparna Chakraborty, cofounder of staffing firm TeamLease Services. “These companies are expanding aggressively and job requirements have almost tripled.” Mobile wallet company MobiKwik is seeking to add about 1,000 people by the end of March as it expands its sales, marketing and product technology teams. “We are seeing several employees at senior and mid-levels coming from sectors such as ecommerce and (fastmoving consumer goods),” said chief business officer Vineet Singh.
Some startup industry experts are seeing a positive spin to the recruitment slowdown and layoffs—an influx of potential hires.
“There is an acute increase in the talent pool, especially in Delhi/Gurgaon,” said Anjli Jain, managing director at EVC Ventures. Jain recently posted on LinkedIn and Twitter calling employees laid off by Snapdeal to apply for positions in the venture capital firm’s portfolio companies. At least 1,000 people have approached the firm already seeking jobs, she said. One problem: Many of these employees were “overpaid by approximately 2x and much more in some cases.”
There could still be a ray of hope amid all this: The India Skills Report by Wheebox, PeopleStrong and CII in November has predicted that hiring intent in the internet business sector will improve by 5-10% in the later part of this year.