'Recruitment drive': 80% early-stage startups set to ramp up hiring in 2023
Bucking the current trend of layoffs among larger corporations, a significant proportion (80 per cent) of early-stage startups, those with a current workforce of fewer than 20 employees, are actively seeking to expand their workforce in 2023, reveals a survey by The Federation of Indian Chambers of Commerce and Industry (FICCI) in partnership with Randstad India.
Over 300 startups participated in the survey.
These startups have secured Series A and Series B funding, are well-capitalised, and are actively seeking to hire new talent. 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.
While startups are planning to expand their workforce, a substantial portion, at 31.92 per cent, anticipate an increase in hiring by over 30 per cent., while 28.08 per cent 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 & defence, energy, and healthcare startups are expected to increase their hiring activities by over 30 per cent.
Overall, 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).
Hiring will primarily occur at the junior and mid-levels, according to the survey. Approximately 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.
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.
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 are some of the hiring obstacles that startups encounter while hiring, as per the survey.
Rohit Bansal, Chairman, FICCI Start-up Committee, and Co-founder, AceVector Group & Titan Capital said startups create a large range of jobs as they grow and mature. 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. 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,” he added.
Viswanath PS, MD & CEO, Randstad India said startups are rapidly emerging as significant players in India's employment landscape.
“With the emergence of several new-age innovative organisations 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,” he said.
Viswanath addded that a majority of early-stage startups are exhibiting strong hiring intentions, which is a testament to the strength of India’s diverse talent pool that’s available in the job market today. “I believe these early-stage startups and their growth ambitions will fuel the next phase of India Inc.’s emergence as the world’s most attractive employment hub.”
Startup recruitment trends
Permanent vs Gig Workforce
- 57.76 per cent of startups are looking for permanent recruits
- Only 42.24 per cent are looking to hire temporary and gig workers
Geography in focus
- Hyderabad and Pune are emerging as the frontrunners in senior-level hiring, reflecting strong intent among startups in these regions.
- Additionally, middle-level hiring is expected to be prominent across cities such as Kolkata, Bengaluru, Mumbai, Chennai, Pune, and Delhi/NCR.
- A considerable proportion of hiring activity across startups is expected to occur at the junior level, with Delhi/NCR, Bengaluru, Mumbai, and Hyderabad being the prominent cities in this category.
Qualifications in demand
- As many as 45.21 per cent of startups are looking to hire semi-skilled employees, while 41.49 per cent of startups are seeking highly skilled professionals.
- In terms of campus placements, a majority of startups, (67.55 per cent) are focusing on private MBA and engineering colleges, as well as state universities, as these institutes offer quality talent at affordable salary packages.
- Only a small proportion (9.16 per cent) of startups are opting for premier institutions such as IITs and IIMs for their campus placements.