Indian startups are paying more to retain talent


India is in the middle of a startup spring, with an average of two new companies being launched every day. These companies are showered with a surfeit of money, mentoring and support networks, but one critical resource that they need—talented workers—is in short supply.

Unlike in Silicon Valley, where working for a startup is a badge of honour, new ventures in India struggle to attract top-notch professionals. Risk-taking, in effect, is mostly confined to investors and founders of companies. Those with the requisite skills tend to be wary of the volatility and often lesser pay in the early days of a startup, as well as the low regard for startup careers in mainstream society.

“We look for brand names,” said Jayaprakash Vikas, who will graduate from one of the country’s premier management schools. The 25-year-old chose not to seek internships at any of the startups recruiting at his campus, as he felt the salary did not match that offered by bigger brands.

To cross this hurdle, entrepreneurs are using specialist hiring firms and innovative online tools to spot talent. The problem is acute in the technology sector, as it requires skilled engineers in areas such as design and product development.

“Hiring for specialised skills is always challenging,” said Upasana Nath, chief recruiting officer at online food guide Zomato, which raised Rs 227 crore of risk capital recently. The five-year-old company that employs 600 people across 11 countries said it will double headcount by the end of next year.

“Finding a quality software developer is the biggest challenge we face,” said Gaurav Aggarwal, founder of Savaari Car Rentals, an Intel Capital-backed venture that employs about 120 people and expects to grow revenue nearly 300 % this year.

For lesser-known startups, the difficulties are even more pronounced. New Delhi based mobile payment company mobileGullak, founded by a team of four last year, is still searching for its first employee.

“The crunch isso acute that we are now looking for talent outside India to fill this requirement,” said Sumesh Menon, founder of U2opia Mobile, who previously worked at Airtel, Bubble Motion and BhartiTelesoft. His three-year-old company, which builds mobile applications, employs 100 people currently.

Experts said much of the problem lies in entrepreneurs not being able to convey the excitement of a new venture to others. “I’ve seen that founders lack the ability to get others excited about the idea,” said Sanjay Swamy, managing partner of startup incubator AngelPrime Partners.

Entrepreneurs are realising the importance of making the right pitch. “They have to either like your story, or like you,” said Amruth BR, founder of education venture VitaBeans. The 26-year-old, who has launched two ventures VitaBeans and, employs 18 people and 45 volunteers.

Recruiters also blame startups for keeping the bar too high. “Everyone wants a rockstar developer,” said Preetam Salian, cofounder of HiringMonk, a company that hires exclusively for startups. “Some (startups) want candidates who are more passionate than the founder. This limits their options,” said 25-year-old Salian, whose company is now six months old.

Aspiring Minds, which assesses the employability of candidates seeking jobs said in sectors such as ecommerce, only 2.68% of the 55,000 people surveyed were employable.

“The threshold for talent in product startups is fairly high,” said Himanshu Aggarwal, chief executive of the Delhi-based venture. Even after a successful hire, startups find they have to battle with multinationals waiting to lure away talent.

Manoj Khandelwal, founder of enterprise software maker mEq Solutions, said an employee who left for lunch one day, never returned. “It happens all the time,” said the 35-year-old entrepreneur, who estimates that he has lost at least 35 people to the big five information technology firms—TCS, Infosys, Wipro, HCL and Cognizant—in the last five years. His company employs about 30 people at present.

Mobile app maker U2opia deals with this by allowing freshly hired graduates to travel the world and interact directly with the clients. “It is important that the passion, the reason why they joined the company in the first place, continues,” said Swamy of AngelPrime.

Krishna Tanuku, executive director of the Wadhwani Centre for Entrepreneurship at the Indian School of Business, is of the view that industry-wide initiatives are required to create awareness about the benefits of working in startups. “They should promote startups as a viable career option,” he said. This is important as many startups have to deal with issues of negative perception.

“It’s a big myth that startups don’t pay well,” said Waqar Azmi, founder of Sutra HR, a hiring firm.

Twenty-five-year-old Rakesh Nagaraj Reddy got an 85% hike in salary when he joined technology startup Ignitarium Technology Solutions from Wipro Technologies two months ago. “Being a part of something new, a new product in the market motivates me. And the best part was, I could choose any part of the project I wanted to,” he said.

“It’s not the money, it is the fear of job security. The best people in India are risk-averse,” said Arjun Zacharia, 32, who founded hyperlocal e-commerce discovery platform Wooplr in March and has nine people in his company.

To fill this gap, firms such as SutraHR, HiringMonk, and Jombay offer innovative ways to deal with the problem. Jombay, an online talent measurement tool set up in August, conducts behavioural testing on potential candidates. “We aid the founder’s gut instinct and eliminate guess work,” said Mohit Gundecha, 27-year-old cofounder of Jombay, which counts marketing company Sokrati and international sea container lessor Seaco as clients.

Startups are also relying on help from peers. Ankur Shukla, a serial entrepreneur sets apart Friday afternoons for a special project. At a cafe, chosen by the first person who seeks him out for help that week, the 29-year-old helps out a startup with tips on online marketing and customer acquisition strategies.

“We sometimes joke that soon there will be ads in matrimonial sites where the most sought after qualification will be ‘entrepreneur’,” said Swamy of AngelPrime. “There is a high opportunity cost of not working in a startup,” said Swamy who earlier was chief executive of mobile payment firm mChek.

Click here for original article as published in TOI

Mohit Bansal(23) is B.Tech in Electronics and Communication Engineering from Indian School of Mines, Dhanbad, India. He has interest in business and entrepreneurship and has published couple of research articles. He is also associated with various NGOs. He is with Techaloo when it was just in concept stage. The Techaloo site was not existing even then. Currently Mohit is working with Mu Sigma as a Business Analyst Profile.

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