Article: Gender pay gap widens in Indian startup ecosystem

Compensation & Benefits

Gender pay gap widens in Indian startup ecosystem

A gradual growth in the salaries is seen for both genders in the Indian startup sector, however, growth in salaries earned by males is higher at 29% as compared to 22% by women.
Gender pay gap widens in Indian startup ecosystem

The Board of Control for Cricket in India (BCCI) last week announced equal international match fees for men and women cricketers.

The move was hailed across sectors but it looks like it will take some time before it is implemented. The situation in the Indian startup sector is yet to become gender-equitable.

An Annual Insights Report by RazorpayX Payroll, the business banking platform of Razorpay, reveals that while salaries in the Indian startup ecosystem are rising, they are not distributed evenly across genders.

Though a gradual growth in the salaries is seen in both genders, however, growth in salaries earned by males is higher at 29% as compared to 22% by women.

Moreover, salary gaps seem to get wider, the higher one goes up the salary bracket.

While the median salary gap between men and women was 46% in the last one year, the salary gap between the two genders in the 95th percentile salary bracket was a whopping 70%. This salary gap is accompanied with a lower participation of women in the workforce - for every 2 men that were hired in the last one year, only 1 woman was recruited.

Steep hiring cutbacks

The changing dynamics of the startup ecosystem has resulted in massive shifts in hiring patterns in the last twelve months.

Facing a capital crunch, startups are experiencing the great normalisation of hiring, limiting their hiring of CXOs and permanent employees on one hand, and increasing payouts to existing employees on the other.

Hiring of new permanent employees has dipped by 61% as compared to October 2021. The dip in hiring is seen across seniority with the CXO hiring noticing a massive normalisation, dropping by 93% since October 2021, says the report.

While hiring across departments has decreased, hiring in technology seems to have been least impacted. Technology-related jobs have managed to marginally increase their contribution to the overall workforce by 4% while the hiring trend is slowing down in general.

Gig workers more popular than hiring full-time employees

While hiring permanent employees has seen a fall, giggers seem to be the preferred way to go for startups. Payments to gig workers have seen a growth of 153% since October  2021.

The total number of enterprises who have shifted to a semi-gig workforce model has increased by 15% since October 2021.

Semi-skilled gig workers who are paid less than Rs 20,000 have the highest contribution to the entire pool of gig workers being hired by startups, followed by those who earn anywhere between Rs 20-40,000. However, these workers are one of the slowest growing cohorts growing at 26% and 52%, respectively.

Skilled gig workers who earn between Rs 85, 000 to more than Rs 150,000, although contributing the least to the overall pool, have seen the highest growth in the last one year.

Gig workers who earn between Rs 85,000-Rs 150, 000 have grown by 62%, while gig workers who earn more than Rs 150,000 grew by 69% in the last one year. This goes on to show that gig workers are gaining more popularity among startups than hiring full-time employees.

Despite drop in hiring, salary spends on rise

While overall hiring has decreased, salary spends have increased by 64.7% since October 2021.

Contrary to previous trends, salaries across different salary levels have been rising gradually but not exponentially, at an average of 12%. However, growth in salaries is very different across different scales of gig workers.

While the median salaries of gig workers have increased by only 19.9% in the last one year, salaries in the 99th percentile of gig workers grew by a whopping 58.3%

“The Indian startup ecosystem has been facing headwinds in the past few months but they have been nothing short of resilient and adaptive to such a dynamic environment. The data from RazorpayX Payroll indicates that startups have been optimising their workforce by building leaner yet stronger teams, keeping in mind the macro-forces.

"Moreover, compensating their existing employees for their contribution towards building sustainable runways in the long run shows that companies have been looking inwards, alongside the increasing adoption of giggers. Coupling this trend with rising salaries across key roles, we will soon see a new era of work among startups,” said Shashank Mehta, vice president and head, RazorpayX.

“However, the existing gender gap in terms of workforce ratio and pay still remains a challenge every startup needs to counter on priority. It is only through equitable participation and pay can we make our workforce truly productive in every sense,” he added.

The insights are based on the payroll data from October 2021 to September 2022 of over 25,000 employees across 1000-plus Indian startups from more than 20 sectors who currently use RazorpayX Payroll.

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Topics: Compensation & Benefits, #DEIB, #Hiring

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