A significant proportion (80 per cent of respondents) of early-stage startups, those with a current workforce of fewer than 20 employees, are actively seeking to expand their workforce in 2023 despite the current trend of layoffs, according to a joint survey by FICCI and HR services company Randstad India.
The survey, which covered over 300 startups, showed that 92 per cent of these startups stated that their hiring decisions will primarily be driven by new project orders, additional funding raised from investors and expansion strategies.
These startups have secured Series-A and Series-B funding, are well-capitalised, and are actively seeking to hire new talent.
“While startups are planning to expand their workforce, a substantial portion, 31.92 per cent anticipate an increase in hiring by over 30 per cent. 28.08 per cent of companies plan to expand their teams in the 11-20 per cent range. Sectors like agri/ agritech, AI/ ML/ deeptech, automotive, and e-commerce/ delivery services are expected to increase hiring in the 11-20 per cent range, while aerospace & defense, Energy, and Healthcare startups are expected to increase their hiring activities by over 30 per cent,” according to a survey report.
It added that sectors depicting the highest intent to hire include healthcare (13 per cent), IT/ ITes (10 per cent), agri/agritech (8 per cent), AI/ ML/ deeptech (7 per cent), fintech (7 per cent) and manufacturing (7 per cent).
The report also said hiring will occur at the junior and mid-levels. About 37.97 per cent of startups have indicated that they intend to recruit more junior-level employees, while 27.27 per cent of respondents are planning to focus on mid-level hiring. However, the agri/ agritech and automotive sectors will focus more on senior-level C-Suite hiring.
The survey further indicates that 54.38 per cent of startups attribute the high attrition rate in the industry to factors such as better pay packages offered by larger corporations, as well as concerns over job security in a startup. Other factors contributing to attrition in startups include a lack of clarity around career progression and credibility.
Interestingly, 57.28 per cent of the surveyed startups believe that ESOPs (Employee Stock Option Pool) have the potential to serve as an effective instrument for retaining employees. Furthermore, 41.49 per cent of surveyed startups have already implemented ESOPs as a retention strategy, according to the survey.
In terms of hiring challenges faced by startups, the primary factors include a deficit in requisite skills, mismatches in salary expectations, and a reluctance among potential candidates to join a startup due to concerns over risk perception.
Rohit Bansal, chairman of FICCI Start-up Committee and co-founder of AceVector Group & Titan Capital, said, “Startups create a large range of jobs as they grow and mature. As this report highlights, the initial opportunities arise as founders onboard the early team to help establish the business. A multiplier impact on job creation is seen in the growth and expansion stage when operations expand, and various initiatives mature.”
He added that the dynamic working environment in startups provides the ideal training ground for aspiring entrepreneurs who then move on to create their own startups. This creates a virtuous cycle of growth, with each successive cohort adding jobs and enterprises. With their pan-India footprint, startups create jobs and economic opportunities beyond just the top cities and are key partners in India’s growth story.
Viswanath P S, MD & CEO of Randstad India, said, “Every large corporation once started as an early-stage company and navigated its way through several challenges to reach where they are today. It gives me immense pleasure to quote that startups are rapidly emerging as significant players in India’s employment landscape. With the emergence of several new-age innovative organizations across sectors, the Indian start-up ecosystem will be a significant contributor to India’s economic growth over the next few years. More importantly, these startups will eventually go on to create unique employment opportunities and career paths, innovation and competitive dynamics in the world of work.”
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