Fund­ing Freeze Puts Startup Hir­ing in Cold Stor­age

Ecomm, lo­gis­tics, gro­cery and food de­liv­ery star­tups worst af­fected

The Economic Times - - Front Page - Mugdha.Vari­yar @times­group.com

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.

TAL­ENT IN­FLUX

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.

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