The appraisal period is just around the corner. Large companies are expected to face stiff competition from Indian startups when it comes to retaining talents. It’s expected that a salary hike in Indian startups during 2022 would put many large corporates and tech giants thinking out of the box to retain their top performers.
Indian startups are gearing up for the highest ever salary increment in the upcoming appraisal cycle. The trend would be driven by the robust growth and record investments in Indian startups. With the record salary hike, startups want to retain their key employees in an environment of intense competition for talent in the technology sector.
In 2021, Indian startups raised a whopping $42 billion – the highest investment ever raised in a year. As investors are ready to pour in more money at insane valuation, startup entrepreneurs are in no mood to miss the bus just bcoz of a shortage of skilled manpower.
Roopank Chaudhary, partner in human capital solutions at Aon India, foresees that this year’s salary increases will be the highest in the last 5-6 years. He backs his claim with the attrition rate which has reached a record high level in the last 5 years. Companies, especially startups, which are mostly dependent on investors’ money may not shy away from poaching employees from their competitors by offering unprecedented salary hikes this year.
Many recruitments and human resource experts believe that a salary hike in 2022 would easily reach back to the pre-covid level but may not be as high as being speculated. They believe that amidst the increasing losses, and pressure for profitability is an all-time high on startups. As the market is fast coming out from the grip of Covid, expenses have once again started shooting up, which will result in increased losses once again. The recent Paytm financial is a classic example of the same.
According to compensation experts, the average salary in startups is expected to remain between 12%-15%, which will be the highest in all sectors.
Despite all the claims and views, one thing that almost every expert agrees about is the salary hike of top performers and key personnel. Undoubtedly, retaining the growth drivers is crucial and it will be the key strategy for all Indian startups. In a bid to do so startups are ready to leave no stone unturned. This means that high-performing employees may receive up to 75% raises while those with lower compensation could see their pay double. The key employees will receive higher bonuses and retention bonuses as well as performance or tenure-linked stock options.
“Given the strong growth of our industry thanks to promising macroeconomics and tremendous headroom for growth in the last few years Covid tailwinds have been on an upswing, Y-oY monetary compensation increases Have been on an Upswing,” stated Saahil Goel, CEO – Shiprocket, the leading logistics aggregator, while talking to a media company.
“Our increases have been set at 5-6% above the market invariably. He added that sustained business momentum had led to an increased bonus pool for our employees.
Another Indian startup, CashKaro is working on a lucrative salary hike strategy to strengthen its talent pool. The company is planning to offer a minimum 15% to as high as 75% to top performers depending on their current compensation.
According to Mayank Kumar, Managing Director – UpGrad, an ed-tech company, the salary increases have been very limited in the two years since the pandemic. This is because of uncertainty within the industry and the need to prioritize the benefits such as flexibility, work-life balance, and Covid support.
“But, things are opening up and, as such, we would see a salary increase improve, mirror pre-Covid level,” he said while speaking with ET.
The cut-throat competition among Indian startups to retain their best minds along with strengthening their talent pool in a bid to keep their startup fundable for investors are the top priorities for startup entrepreneurs nowadays. However, such a strategy has resulted in an unprecedented demand for talent which is a major factor in the rise of increments. This is particularly true for product and technology teams.
The eye-popping salary hike will not be limited to well-funded startups alone. The salary hike in startups during the upcoming appraisal has kept many, who faced the heat due to pandemic optimistic. Many startup employees, who were spared from any salary hike due to the adverse effects of pandemics on their startups, are expecting a lucrative hike as the market is fast pacing towards normalcy.