The startup ecosystem in India has been rapidly changing; its landscape markedly different from what it is five years ago. So much so that today it resembles a microcosm of young new age companies experimenting with established norms and operating with its own set of rules that often aren’t reflected in the larger business world outside. Many successful startups today are defined by similar characteristics like an agile work culture that fosters tech-driven innovation and where often creativity and domain experience trump over other aspects as key skill sets. 

With a proactive approach to problem-solving—often as a result of running on tight budgets and funders scrutiny—and an active integration of technology to improve key business processes, the startup ecosystem today is redefining working parameters across the board.  This tech-intensive approach to business has, in turn, reshaped many traditional internal functions.

Although today technology has heavily influenced how startups undertake talent decisions, challenges still remain. While factors such as hiring remain a relevant part, startups also face new challenges when it comes to developing, engaging, and retaining talent. Many startups face work culture issues which can range from uncoordinated and disengaged teams to the culture getting labeled as “toxic”. 

Although the standard response across many startups has been to ignore many of such talent issues often at the cost of higher productivity and returns, sustaining the ship for long becomes a herculean task without addressing such talent issues. And while using technology to increase the efficiency of HR processes, it often falls short of tackling such problems incompletion. This is what makes the role of HR professionals and founders even more complicated. 

Technology has heavily influenced how startups undertake talent decisions. However, challenges still remain. Startups face new challenges when it comes to developing, engaging, and retaining talent

Talent pools and hiring

Access to the right talent has been a global issue for many years. The rise in tech-driven job portfolios, in combination with changing demographic preferences and inequal skill distribution, has created a serious shortage of talent across the globe. The latest of the Manpower Group study1 on talent crunch—a report being published since 2006— reported that 2018 had the bleakest findings ever. In the case of India, it was reported to be in the top 10 most-adversely impacted markets as 56 percent of employers face challenges in finding suitable talent to fill vacant positions. Such labor markets trends are similar when it comes to startups and pose a severe challenge in their steady growth. 

But hiring trends don’t limit themselves to a shortage of talent in the labor markets.   

When it comes to hiring, reports show that many startups experience a relatively short time while filling senior positions, often paying hefty amounts. According to one such research2 by Trifecta Capital, a large proportion of startups are able to recruit senior talent within 6 months. The report noted that many—over 80 percent of startups interviewed in the report— preferred to recruit talent from other startups as familiarity with the work culture and clear understanding of deliverables are important considerations to remain productive in fast-paced work culture.  It also helps startups to fill specific positions with talent that possess the relevant domain experience and don’t require an extensive hand-holding period to begin working. This, in turn, has also fuelled the competition for talent within niche areas across the startup talent landscape and has resulted in rising compensation packages and hefty joining increments to promising candidates. 

But these still remain short term solutions to the overall shortage of talent that startups face today. The moniker ‘Build, Buy, Borrow, and Bridge’ is often advised to leaders and employers to face the talent challenges of tomorrow.  As startups and founders step into an uncertain future, a workforce that is adequately balanced in technical and soft skills will be of critical importance. Organizations need to accelerate efforts to upskill and reskill employees for the new world of work so companies succeed and people have employment security for the long term. Although this might sound counterintuitive for startups that are based on the philosophy of buying talent rather than building one, it remains a highly relevant option today.

While hiring to find the right skills remains a significant challenge in front of startups, creating a diverse workforce often takes a bask step when it comes to hiring. The participation of women across key positions within the startup sector remains low. Plagued by both systemic barriers to access both skills and opportunities and often a startup culture that has traditionally remained male-dominated means that startup workplaces have a greatly skewed workforce.  To benefit from a diverse workforce, HR policies have to gear towards creating one.

Compensation and managing attrition 

Indian startups in the last few years have witnessed the departure of key talent, and in turn, startups spending hefty amounts to attract suitable talent, often going for experience by targeting western markets. Today, in addition to hiring the right talent, their retention is a growing concern among founders and young companies, even ones who have successfully raised funding in their early stages of working.  Although many suggest that dedicated HR functions towards hiring and managing talent are of low priority during these stages, it’s also in such that many young companies bleed their talent away. 

The problem is retaining talent is also reflected in how often startups and young companies feel spending huge sums in replacing talent is more worth than spending on retention and engagement strategies.  A combination of such ignorance towards HR practices and a work culture that remains uncertain in its functioning during the early years, one which has traditionally seen employees ‘jump the ship’ during tough times, today has meant that retention has truly become a big problem in front of startups in India to tackle. For Startups around the world, raising funds has become easier than to retain talent. In a recent report3 by Accel Partners, a similar sentiment was highlighted and the survey went on to explain that getting people in the initial phase and asking them to stick to the company has become a herculean task to many startup leaders.

The way forward

Irrespective of tech-driven business model which often forms the core of many new age startups, pivotal shifts across the landscape haven’t been undertaken without access to quality talent supporting startups to undertake a successful journey. Driven by evolving talent consideration and changing nature of the business, startups today face their own set of problems. Talent considerations have been rapidly changing and today with the scope of AI and automation on the rise, many see further changes reshaping skillset demands within the startup ecosystem. This problem of evolving skillset demands, when taken into consideration with the fast-paced work culture, makes it a tough job for HR professionals and recruiters to find the right talent. In addition, while some of the larger startups in the country today have begun restructuring their company policies to create a more gender-balanced and diverse workforce, diversity still remains a major issue within the startup ecosystem, especially tech facing companies. 

With the rise of mobile penetration across India and many getting connected through easier access of the internet, jobs across tech facing startups are going to increase. In addition, startups are key in ensuring India’s tech talent pool is able to work on cutting edge technologies like blockchain and AI. But even as jobs across such areas grow in the country, addressing its growing talent issues would be an important barrier to overcome.