Professionals who are drawing extremely high salaries and looking to move out from troubled startups are facing sharp cuts in compensation while switching jobs. Also, startup founders are often wary of hiring these executives, even at lower salaries, thinking they will be among the first to jump ship when the situation improves.
India’s startup ecosystem is currently going through its worst funding winter in recent times. With the cash raised in earlier rounds depleting fast, many are slashing jobs and junking expansion plans to cut costs and turn profitable.
“It’s not only professionals who are not comfortable with more than a 20-25% cut. Companies too are avoiding candidates whose current salaries are 30% or more higher than their allocated budget for the role,” said Anshuman Das, managing partner of specialised executive search firm Longhouse Consulting.
“They are saying: ‘Too high… don’t touch him/her’,” said Das.
He cited the example of an online fashion company which is trying to hire executives in the Rs 60-80 lakh band. Some of the resumes that have come in are of people at salaries of Rs 1.2 crore and above. The founder is not even entertaining such candidates, said Das.
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There are two categories of people among those whose salaries are higher than the budgets, said NoBroker chief executive Amit Agarwal. For the first, who are at a higher salary level but still good, the company is matching salaries and even giving a slight hike so that the person doesn’t feel short-changed.But candidates at what he calls “obnoxiously high salaries”, above 50-60% of its budget band, are usually not considered. “The message going out is that the main thing such candidates are chasing is money. They’ll leave as soon as things improve. About 20-30% of resumes are in this category – in the current market, they’ve outpriced themselves,” said Agarwal.
The proptech company is hiring for senior roles in marketing, technology and business.
Ashwin Damera, CEO, Eruditus and Emeritus, said his company is going slow on hiring but is seeing a lot of resumes from professionals looking for a change – many of them at super-inflated salaries.
“Two years ago, we would have wanted to hire some of them,” said Damera. “Now we won’t even interview these people. How long will they last?”
Last year, average hikes while changing jobs were in the range of 30-50%; at the higher end salaries were doubled. Now the hikes have come down to a fraction of that, said Ashish Sanganeria, senior partner at executive search firm Transearch.
A CXO at a unicorn drawing a salary of Rs 3 crore, with an equity component in millions, is now looking out for a job, after the company is cutting back after raising funding at a very high valuation. The executive in question is willing to take a 25% cut on the cash component; for the equity part, he is willing to compromise even more.
“Companies are much more conscious about costs now. But they won’t drive too hard a bargain. They won’t risk that person leaving when the market is better,” said Sanganeria.
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