Hiring in start-up sector expected to be slow in next few quarters

If one goes by the latest hiring trends in India by tech and early-stage start-ups, one would be disappointed. Hiring has dried up, and many start-ups have laid off thousands of people. As per media reports, almost half of the employees of unicorn start-ups are exploring new opportunities. Hiring in start-up sector in India is expected to remain slow in the next few quarters. Experts with whom THE WEEK spoke feel that start-ups are aiming to focus on reducing costs and trying their best to survive in the market.

“Typically, start-ups are currently focusing on hiring only critical and replacement roles. The trend is expected to continue for at least another quarter. They are hiring mostly for the roles of UI/UX developers, DevOps, Java, business development and marketing. However, relatively established start-ups in the EV, manufacturing, chemical and textile space are performing much better. They are benefiting from the China Plus One strategy being implemented worldwide and the Make in India push from the government,” observed Aditya Narayan Mishra, director and CEO of CIEL HR.

Experts believe that a large population of start-ups has not come to the point of good circumstances as yet. “Start-ups are still in the midst of building an autonomous engine of revenue growth. Simultaneously, there are early signs of funding winter on the horizon. As a result, many of the overextended start-ups are likely to be squeezed by the onslaught of these twin trends,” pointed out Alok Shende of Mumbai-based Ascentius Consulting.

Market observers point out that a gloomy economic outlook outside Asia coupled with cautious budgets have pushed services industry to control costs leading to layoffs. Reduced inflows into start-ups have led to hiring slowdowns over the last 12 months in the country. The recent report point out that start-ups in the fin-tech and the e-commerce space may still hire people but ed-tech start-ups may see a slowdown in hiring.

“Though there are no indications of a quick turnaround on either of the scenarios, hiring by start-ups will see a rise in quality of hires as opposed to the number and hence does not appear to be a doomsday for freshers or entrants in the 3- 6 year experience bracket. However the middle and senior managerial positions will witness a hiring freeze in the current economic situation,” remarked Subramanyam S, founder, president and CEO of AscentHR.

He further pointed out that new hires can still be hopeful of jobs but will have to bear with a more rational hiring method and more realistic compensation trends. “Given the current growth trends of GDP, over the next few years I do not see any drastic reduction of workforce owing to global economic scenario but more of a normalised growth,” added Subramanyam.

Indian start-ups sector is estimated to have laid off over 50,000 employees since the beginning of 2022 until now. A combination of factors such as the Russia-Ukraine war which had a cascading effect leading to increased commodity prices, supply chain blockage, weak consumer sentiment, funding winter, and eventual layoffs in both big tech and startup firms led to this.

However, such massive layoffs are well behind start-ups and most early to mid-stage start-ups are on a revamp mode. Even purportedly struggling segments such as quick commerce firms are doubling their headcount in the next three months. D2C startups are looking to ramp up and make a strong case for acquisition as several large existing FMCG firms have been buying D2C brands in a flurry of late.

Entry-level profiles in the supply chain such as warehouse/depot workers, in the category of pickers, packers loaders unloaders etc, and delivery partners are in demand, to the tune of 40 per cent more than last year at the same time. Also, in technology start-ups and e-commerce startups, apart from such profiles, there is continued demand for app developers, UI/UX designers, testers, product managers and the like.

Start-ups have in general begun to have a growth outlook and are actively looking to ramp up the filling of such positions as those who are laid off by big tech are ripe for hiring right now, said Balasubramanian A., vice president and business head, TeamLease.