Layoffs across Indian startups have crossed the 12,000 mark this year as companies struggle to raise funds and are cutting costs to survive the bleak phase. This comes after a year of aggressive hiring by startups and high employee costs as tech salaries skyrocketed in 2021.
In an episode of Moneycontrol Masterclass with Chandra R Srikanth, Teamlease co-founder Rituparna Chakraborty said that while layoffs are heartbreaking, transitioning affected employees to a new workplace isn’t taking too much time as they have valuable skills.
Experts on the panel said that while a correction is healthy for the ecosystem (especially in spheres like edtech which has seen a bulk of the layoffs), businesses must be able to weather some downturn and not lay off employees at the first sign of trouble. In fact, upGrad CEO Mayank Kumar said he witnessed three edtech companies shutting operations in the 48 hours preceding the discussion.
"Burning too much capital to create a market is not sustainable especially when the money tap has been turned off," said TN Hari of the Artha School of Entrepreneurship.
Companies have not only been spending significantly to acquire customers, but salaries too grew astronomically. Now, people who have higher salaries are struggling to find jobs, with some having to take pay cuts as well. "Building a business sustainably is very important and so is building one's career equally and sustainably,” Hari added.
Chandra Sekhar Garisa, CEO at Monster India, added that startups get the quality of hiring right, and so the demand for them has been very high. “I don't think there is any stigma around laid-off talent,” he said.
“A key concern is really high salary levels at startups. Compensation correction may happen but I don't think there is any issue in talent getting absorbed elsewhere,” he added.
While the current crop of employees may not be able to attract the same level of salaries, they certainly will be employable and may have to reorient themselves, experts said.
According to Pesto co-founder Ayush Jaiswal, most youngsters in startups have not seen the 2008 or 2016 crises, adding that they don't have much loyalty to a company. In a similar vein, Hari added that people have not been joining startups to join, but mostly for the good deals. “Irrational exuberance often hits both the stock market and startups,” Hari added.
He said that while there are long-term and short-term trends, working with a company that is more aligned with long-term trends will always be more rewarding.
Advising youngsters navigating the job market currently, Chakraborty from Teamlease said, “Drop your standards when on compensation, be flexible on contracts. Just ignore the frills and focus on the learning.”
People may find jobs, but experts added that having a degree and the requisite skills both become important.
"In a downturn like this, education attains importance,” said Mayank Kumar, CEO of UpGrad, adding that certification and life-long learning will be the norm going forward.3.
“Skills will eat degrees for lunch at any point. What you learn in college will become irrelevant in a few years,” added Jaiswal from Pesto. However, Chakraborty stressed that the social significance of degrees cannot be ignored in India.
Notwithstanding, it isn’t all doom and gloom. Garisa added that he finds it tough to believe that the demand for tech professionals will go down. “It’s on an irreversible path,” he said, adding that demand for tech talent is robust.
"From winter, there's a great spring in the form of markets and so it's the best time to build a company and the best time to build your career,” said Kumar.