The ‘War On Talent’ in India
Globally, millions of employees are walking away from their jobs in a phenomenon that has come to be known as the ‘Great Resignation’. Over the last six months, the attrition rate at India’s IT majors has spiked dramatically to touch a range of 20–30% per annum (effectively amounting to a new employee roster, or a blank slate, every four years).
With more than 200 unicorns and ‘soonicorns’ thirsting for talent, and thousands of smaller startups too on a hiring spree, companies outside this hallowed ecosystem are gasping for breath.
Inside India’s Great Tech Talent Crunch
Despite India having one of the largest tech talent pools (over 4.5 million engineers) in the world, most companies are struggling to fill key positions as the demand for niche new-age skills has multiplied in volume and value.
Since most of these startups are well funded and scaling rapidly, it has become extremely difficult for traditional companies to compete-both to hire as well as to retain talent. This war for talent is a very good indicator of macro-level innovation and a rebalancing that is an integral part of economic progress.
Not only is there a massive talent crunch, but the employability costs for worthy candidates are also prohibitive…
Dipping into the same talent pool
Quality tech talent was always in short supply. But, why did this constraint blow up in the last few quarters? There are four types of organizations looking to hire Indian engineers right now:
- Indian IT and MNC IT (IBM, Accenture, etc.)
- GICs or offshore units of large multinationals (Walmart, Target, Goldman Sachs, etc.)
- Product companies (Amazon, Google, Apple, Facebook, etc.)
- Indian & Global startups
“India is cheaper than the Valley but not Southeast Asia or Europe. If you’re heading a particular function, you’re definitely looking at a crore and above. At Flipkart, the top 38–40 employees earn more than a crore. It is no longer such a big metric to crack.” — Senior executive at an Indonesian startup
The pandemic-led acceleration in digitization coupled with the convenience of remote working has opened up the job market to the world. Borderless hiring is becoming a reality with international tech companies, from Silicon Valley to Southeast Asia, dipping into the same talent pool of Indian engineers as homegrown startups are.
Looking ahead: Will this frenzy sustain?
The short answer is yes. Even though India’s startup ecosystem went through a similar bull phase in 2014–15, followed by a lull in 2016–17 (reversed by Walmart’s Flipkart buyout in 2018) with companies shutting down or being massively downsized, founders believe that situation wouldn’t be repeated.
“The sophistication of talent has changed. The baseline for remuneration has been reset. And this will continue. Talent is a real problem statement in India. I don’t see demand going away anytime soon. Every company worth its salt will hire actively.” — Varun Khona, Co-founder and CEO, Headout
With funding unlikely to dry up anytime soon, and the pandemic accelerating growth of internet startups, this decade could see India becoming a prized talent factory for the world. Any internet business with a founder seen as credible and a business seen as viable in the simplest sense is inundated with investment offers, investors say.
What has changed in India?
India is in the middle of an inflection point where the global investors are looking towards the country as the next Unicorn hub of the century. The exit opportunities in start-ups through the IPO route have turned out to be feasible for the first time in India. This has a top-to-bottom effect in the investment ecosystem, where the conviction of the global PE firms in the businesses has stirred the interests of even the small players and angel investors, hence having a multiplier effect on the liquidity for start-up funding.
Global technology startups are starting to either establish a footprint in India or expand their existing operations to exploit a readily-available pool of technology talent, especially in niche digital areas such as analytics and data science. Investors are also facing a challenging time, with even top multinational funds struggling to get into the hottest deals. Newer companies that may have earlier struggled to find an investor who can take a moonshot bet without expecting immediate results are now flooded with investment offers.
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