Unicorns May Be Splurging But Startup Salaries Are Slowing as Industry Slows 

India’s e-commerce startup industry is slowing down as funding has become scarce, growth has shrunk and consolidation has become the name of the game. One would think that the hiring activity would also simultaneously slow down and people’s salary expectations would get rationalised. But some of the e-commerce unicorns are still willing to throw eye-popping amounts to get the desired people, even if this happens at unrealistic salary expectations.

A senior official at a venture capital firm which has funded multiple startups gave this instance of an engineer specialising in Android; he is an IIT alumnus with just about two years of work experience. He was drawing an annual income of around Rs 9 lakh in company A, but one of the big three poster boys of Indian e-commerce then decided to offer him a 300 percent raise, at Rs 27 lakh. This engineer was only a “mid-level” performer and also liked working at the company he was employed in. But who would say no to such an over-generous raise? Company A wanted to retain him, but couldn’t match the offer. So he joined the second company.

The question is, how many startups or established biggies are now able to offer 2x or 3x salary jumps? Also, are such jumps justified at all in a slowing market?

So what is happening is this: unicorns or companies flush with funds continue to offer potential employees insane salaries, but most others have come back to terra firma.

Bipin Preet Singh, founder of Mobikwik, gives the example of one aspirant who was drawing about Rs 35 lakh annually at his workplace. He was hired by a SoftBank-funded company for almost double that package as Mobikwick could not meet his salary expectations. “We do not offer this kind of a salary jump, we have a different strategy. We are offering an opportunity to grow and learn. Outstanding people do deserve the top dollar, but then these are few and far between,” Singh said.

Another person employed with one of Mobikwik’s direct competitors was drawing about Rs 45 lakh annually. He landed a job with another company at, again, almost double that package. Unfortunately, the second company soon folded up and his resume was back in the market. But he is now unlikely to get the salary he was last drawing.

In the last few days, co-founder of startup investment firm SeedFund, Mahesh Murthy, began a conversation on Twitter about the unrealistic salary expectations at startups. “Storm of CVs from failed startups. But arrogance still remains: ppl wth 2 yrs exp seeking 15L, 6 yrs seeking 35L!” he tweeted.

Murthy told Swarajya that the madness in the e-commerce and startup space is because a lot of money has been given to founders who want to take large salaries themselves and pay high salaries to their classmates and peers.

Well-funded tech startups were, till recently, the envy of fresh graduates, as these companies dominated hiring on prominent campuses with fat pay packages which overshot the Rs 1 crore mark. Already, this trend has waned as some sanity has sunk into the market.

Job losses are now becoming common in the startup ecosystem, much like other industries. In the last few days, there have been reports about 4,000 people losing their jobs due to a suspension of operations at the e-commerce site, Askme. Earlier, Flipkart had asked about 1,000 underperformers to leave. Meanwhile, Snapdeal is shutting down a luxury fashion portal which could lead to a loss of hundreds of jobs. Taxi aggregator Ola has shut down operations of TaxiForSure, a company it had acquired in March 2015, resulting in hundreds of lay-offs.

All these developments should obviously soften the job market for high flyers.

Kris Lakshmikanth, CEO and MD at executive search firm, HeadHunters India, says that when the e-commerce market was at its peak in 2015, people switching jobs in the industry generally expected a 50 percent raise. The same people, now looking for jobs as the overall market has shrunk, continue to have an unrealistic salary expectation. “We now have to tell such people they may not even get their current salaries at their next jobs.”

Startups that typically chase growth are almost always looking at scaling up rapidly, and this skews the demand-supply situation, says Arpit Agarwal, Principal at Blume Ventures. Unicon Baba (@uni_con1), an anonymous twitter account that tweets on Indian startups, says everyone is throwing an IIT or IIM graduate at every problem. “Fund managers, funded founders, funded startup employees all are IIT/IIM. Now, you need to pay 3x-4x for this most sought-after lot…This leads to high benchmarking of salaries in the sense that even if non IIT/IIM candidates get hired the startup still ends up paying 1.5x-2x of fair market price.”

A senior functionary at one of the topmost e-commerce companies says some functions and skill sets still attract the top dollar, never mind the market slowdown.

But sanity has begun to return to the startup ecosystem. Agarwal says “Salary hikes are slowing down now. Some are even joining at salary cuts. Many are now looking for stable jobs as smaller companies find it tough to hire and funding slows down”.

Murthy of SeedFund says job applicants should face rejection and perhaps incredulity too now. They should know they’re getting out of the funding bubble into the real world. “Recruiters earlier thought they could make 8.33 percent on a Rs 30 lakh salary package for someone with two years’ experience. Now they need to try to earn their 8.33 percent from Rs 5 and Rs 8 lakh salaries.”

With the industry slowing down, there are a lot more resumes in the market now than, say, the same time last year. Unless a candidate comes armed with a highly prized skill, there is little chance of a 50-100 percent jump in salaries. Most people looking out would be lucky to get another job, especially in the mid- and senior-level positions. Even the VCs who were earlier funding mindless salary packages have turned cautious. This can only augur well for the near future as the e-commerce industry tries to get its mojo back.