India’s employment story may have shifted from the lure of multinational corporations to startups, but the last two years have been a rough ride for the Indian entrepreneurial ecosystem. The first half of 2024 saw nearly 10,000 employees being laid off in Indian startups, according to data from Longhouse Consulting.
This was an improvement from the 15,000 layoffs in the second half of 2023, which followed the 23,000 layoffs in the first half of the same year. India’s economic conditions remain favourable, with an estimated growth rate of 9.7% in Q1 2024-25, but does a startup job and its perks offset the high-volatile environment? HR experts seem unanimous in their response.
“At an ecosystem level, we have gone through the worst of it already,” says PhonePe’s Chief People Officer Manmeet Sandhu. An HR expert with more than 20 years of experience, Sandhu was speaking on YourStory’s new podcast, The Mass Effect. In the first episode, hosted by Shivani Muthanna, Director, Content at YourStory, Sandhu spoke about the state of affairs in startup hiring and work culture in India with Kartik Narayan, CEO of Staffing from TeamLease; Kamal Karanth, Co-founder at Xpheno; and Ashish Kumar Singh, Chief HR Officer at Meesho.
In the last couple of years, Indian startups have shown a preference for freshers or young professionals. Data by foundit (formerly Monster) reveals that from April 2023 to 2024, 53% of all job openings in startups were inviting freshers. The data also revealed that IT services led the share of available jobs in startups, with Bengaluru the top city for such jobs. This shift was not necessarily led by people from IITs or IIMs, but those who demonstrated problem-solving skills alongside teamwork and communication, the HR experts said.
Watch the full conversation on the first episode of The Mass Effect:
According to Xpheno’s Karanth, startup jobs have become an aspirational parameter for youngsters. The number of people who worked in tech jobs in startups had doubled to 5 lakh in the post-vaccination hiring boom as compared to before the pandemic. Despite the job cuts and people leaving, the number of people working in startups remained strong. While the number of tech jobs had reduced, Karanth says that the 190 companies his company tracked had hired close to 32,000 people in the past two years.
Startups may be a high-churn environment but remain at the top of the pyramid when it comes to job aspirations for techies. “Last year, we saw 8,000 people move from product companies to startups,” Karanth adds.
Startups were followed by the large FAANG companies (Facebook, Amazon, Apple, Netflix, and Google), which employ 1.4 million people in India, and Fortune 500 companies, GCCs, IT services firms. The bottom of the pyramid housed non-technology companies, including banks and PSUs.
Image courtesy: Xpheno
Hiring for long-term value creation
Among the 1.4 lakh startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT), 117 are unicorns as of December 2024.
The year 2024 was revolutionary for Indian startups: 12 companies launched their IPOs as compared to six in 2023, six in 2022, and 10 in 2021. Collectively, they raised more than $4 billion, including Swiggy’s $1.5 billion offering and more than $730 million by Ola Electric.
Many tech employees have turned startup founders, but there is now a “level of good sense” in how startups are being founded, Sandhu says.
“We went through a phase where everybody thought that they could be a startup founder.” This phase has “tempered”, and “that’s a good thing, because now people are thinking about potential value-creating ideas where this could possibly translate into a long-term successful business. People are being a lot more sensible about that”, she says.
This tempering has also changed the way startups are looking at hiring.
According to TeamLease’s Narayan, (hiring) managers previously expected candidates to have functional experience. Now, there’s a greater acceptance of “fungibility” — that one could have different functional backgrounds but go into fields other than ones they had experience in, he says. He adds that an exception was when hiring at the senior level, where the conversation leaned more towards a risk appetite.
The experts say that startups have, in the past few years, moved from the idea of “growth at any cost” to being profitable. An employee’s contribution to build “zero to one” products meant their value was going up in the future, and this, coupled with the autonomy employees got with regard to innovation, are driving factors for working in a startup.
What skills do you need to work in a startup today?
Early-stage funding for startups halved this year from its peak activity in 2021-2022, data from Tracxn reveals. While $3 billion early-stage funding was raised across 1,533 deals through November 2024, it was down from $4 billion spread across 2,137 deals in the same period last year. Did this have any effect on who startups were employing?
“One trait I definitely see in most startups is [that] you should have the ability to do a lot more things than just a defined job,” says Narayan, adding that an appetite for risk and ambiguity was also called for.
“One problem that happens [if one works] in large corporations [is], you don’t figure out whether you are driving the train or riding the train. That shock comes the moment you enter a startup… [It’s] a reality check, which happens with many people and then suddenly [they] realise, this is not for me,” Narayan says.
Startups bring forth the need to go beyond technical skills, showcase the ability to articulate oneself, collaborate and work with others, and have good interpersonal communication skills.
Recruiters at Meesho are looking for people who are good at problem-solving and have a mission orientation, not necessarily people with expertise in a particular area, Singh says. “By and large, we are very comfortable putting people in an area that they have never worked in. It has worked for us because they bring very original thoughts and questions, which earlier somebody would not even ask,” he says, adding that first principles were highly important to the company.
At PhonePe, Sandhu looks for not just demographic diversity, but also thought and functional diversity while bringing people together across multiple functions and ensuring that there is an understanding of how the fundamentals work. This also included common frameworks that help them think about how far they could go with a problem.
Working in a startup is an equation of risk versus reward, the experts say.
The scope of hiring within startups has expanded beyond IITs and IIMs. This is not just because the problem pool has expanded, but also because democratisation has taken place, enabling people with different skill sets to solve various problems and found startups in different industries. Moreover, startups are also looking for people with resolve and a high agency to solve problems and get tasks done.
However, Karanth feels the skills gained from IITs and IIMs cannot be discounted, not because of the degree itself but the experience gained during the course.
“One reason pedigree and credentialing help is network and access to resources. A lot of early-stage companies might also fail because they do not have the right network to be able to access resources,” Narayan says.
What does Gen Z want?
With a large number of Zoomers entering the workforce, companies are adapting to different ways of working. Gen Z and startups seem similar as both have the ability to pivot easily, an advantage in the entrepreneurial ecosystem as compared to a large corporation.
Singh says the main thing Gen Z employees look for in a startup is flexibility. Their main purpose could be something outside of their job but they are whip smart about many things. “They know so many things so well, even at a very young age, [things] that people with a lot of experience sometimes don’t catch.”
Gen Z has a need for a connection as they are lonely when compared to other generations, Sandhu says. But that isn’t a sufficient reason to work; they need deeper engagement.
Zoomers display an intensity towards being “obsessed” in solving a problem over consistency via a typical 9-5 job, Narayan says. They tend to be highly engaged in a given problem, but do not want boring routines.
Startups 2.0: A boon for Indian economy
The Startup India initiative was announced in 2016, and according to DPIIT data, startups have created nearly 15.5 lakh direct jobs as of 2024, contributing to 10-15% to India’s gross domestic product (GDP) growth.
According to the Confederation of Indian Industry’s Unicorn 2.0 report released in April 2024, India’s startup ecosystem has the potential to add $1 trillion to the country’s economy by 2030, in addition to creating 50 million new jobs. Of these 50 million, 4-5 million were expected to be direct jobs, 9-10 million were in gig work, and 35-40 million would be indirect. The report added that startups created 20-25% of jobs in India over the last decade.
The podcast leans into how artificial intelligence will come into play in these new jobs. Other talking points include India’s hustle culture, which has led to toxicity in the workplace for many, how to deal with its repercussions, and red and green flags for hiring managers.
