As the funding winter takes hold of India’s new-age tech sector, startups are adopting a conservative approach to hiring, resulting in a significant reduction in open job positions compared to the previous year. According to data from executive search firm Longhouse Consulting, open positions in these companies have decreased to about one-third of the 2021 levels when capital was abundant.
Employees at these startups are also experiencing lower salary hikes, with only 10% being offered on the higher side, and some even facing a 10% salary cut. The findings, shared exclusively with ET, indicate that bonus and variable pay-outs have also been smaller this year compared to previous years, contributing to the decline in job opportunities.
Longhouse data reveals that the number of open job positions in these companies was around 200,000 between June 2022 and May 2023, down from 600,000 in previous years when excessive hiring and salary hikes were prevalent in the sector.
Amshuman Das, co-founder and CEO of Longhouse Consulting, predicts that the situation will worsen in FY24, with hiring expected to remain muted throughout the year, potentially resulting in an 80% reduction in open positions by the end of the fiscal year.
Startups have become more cautious about their hiring decisions, leading to longer hiring cycles, which have increased from an average of six weeks to eight weeks. In some cases, the hiring process for critical roles has even extended to 15 weeks, as companies aim to make well-informed hiring choices.
Late-stage startups have seen a 75% reduction in open positions compared to pre-COVID levels in 2019, while early-stage companies have experienced a dip of approximately 55%, according to Longhouse data. The focus for late-stage companies has shifted to non-tech roles, prioritizing profitability, while early-stage companies concentrate on product development and finding the right talent fit.
The funding crunch and the pressure to cut burn rates have forced startups to prioritize core revenues and overall profitability. Hiring for new initiatives and experimental projects has been put on hold, and companies are emphasizing mid-senior level hires to ensure long-term prudence.
The scarcity of funds and the need for a higher return on investment have prompted startups to scrutinize hiring decisions more closely and carefully evaluate candidates. This shift signifies a significant change from the previous funding-driven hiring approach, as startups now prioritize sustainability and cost-efficiency in their talent acquisition strategies.
