Charged up by record funding worth $36 billion in 2021, Indian startups raised salaries for staff by a whopping 43 per cent that year. But the euphoria among investors soon fizzled out, giving way to a 90 per cent drop in funding for July 2022 and a 73 per cent dip in August. But even as only 57 out of 100 unicorns in India are making losses, startups are actually paying a lot more to engineers than big tech firms such as Infosys.
Funding frenzy behind salary hikes?
Research by a firm called Weekday, which curates a list of techies for startups to hire, shows that while an engineer with four years of experience earns Rs 10 lakh a year at a big tech firm, startups offer Rs 26 lakh per annum to such candidates. It also mentioned that ShareChat was paying the most among these startups, at Rs 47 lakh per annum, followed by CRED at Rs 40 lakh, and Swiggy, Dream11 as well as Meesho at Rs 35 lakh a year. The data from 50,000 engineers showed that those at startups offering products earned 160 per cent more than service-based firms such as TCS and Wipro.
It also found that engineers were likely to spend 2.4 years on average at Infosys, which is double the amount of time techies stay at a startup. But the tendency to switch more came from the increment cycle, where employees at startups got a 10 per cent raise as their experience grew. Although these numbers create a rosy picture of the Indian startup story, there’s a need to take a closer look.
Blowing too much hot air into the startup bubble?
For instance, Byju’s which pays Rs 20 lakh to Rs 25 lakh per annum to engineers, recently posted a steep increase in losses and is struggling to close an $800 million round of funding. The fund crunch forced Indian startups to fire 5000 employees in the first five months of 2022 alone and ride-hailing unicorn Ola reportedly laid off 200 engineers this month. Swiggy faced strikes from delivery partners struggling to make ends meet despite working for 15 hours, while engineers get Rs 35 lakh per annum.
The stark contrast reveals a grim reality behind the bright side that Weekday’s data focuses on, and higher pay, as well as permission for moonlighting at startups, don’t help with layoffs and fund cuts looming large.