Startups lure mid-level IT talent with better job profile, ESOPs

Sep 23 2013, 20:27 IST
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The salaries at startups now are at par with what mid-tier IT firms are offering. The salaries at startups now are at par with what mid-tier IT firms are offering.
SummaryWith $108 bn IT-ITes industry jammed by slowdown, techies are sensing an exciting career with startup.

When Valerie Rozycki Wagoner, an American-origin entrepreneur who founded ZipDial Mobile Solutions, was interviewing a candidate from a larger IT firm, she was told that the Bangalore-based startup should be paying him more for moving to a smaller brand.

The candidate eventually joined her company, Wagoner recounts, not so much for a higher salary but the flexibility and the long-term value that the combination of bonuses, variable pay and employee stock ownership plan (ESOPs) offered.

Recruitment experts point out that there has been a mindset and attitude change among IT professionals in the last few years. With the $108-billion Indian IT-ITes industry jammed by the slowdown, techies at mid levels are sensing an exciting career with startups, which are not just matching compensation with large players, but offering a flexible work environment along with employee stock options.

“I think employees are starting to show a lot more willingness in working for start-ups. We have been able to build a strong mid-level team. Five years ago they were afraid of being interviewed by a start-up,” said Wagoner. ZipDial, a 38-member strong company that hired as many as 20 people this year, has around 60% of the workforce in the mid-level segment.

“The salaries at startups now are at par with what mid-tier IT firms are offering. A startup at mid level offers in the range of R6-7 lakh per annum for skills such as java or data-based management. For niche skills, it is typically between R 8-10 lakh depending on the profile of the candidate,” said Surabhi Mathur-Gandhi, senior vice president, TeamLease.

With inputs from markets and talking to candidates, staffing company TeamLease has found a 10% rise in terms of willingness among people to join startups from mid-sized IT companies.

According to human resource (HR) firms, startups that are attracting talent are mostly in areas like gaming, app development, internet and mobile. Dwindling salary hikes and perks in the IT industry has convinced employees that it is better to be a part of a newer setup.

“Ten years ago, if you just found yourself in the right place in an IT company you will have a good pay, promotions, leadership role or high level of responsibility. Bigger portfolios were all guaranteed, but that is not the case anymore. The IT industry is now less like the boom industry it was and more and more like a traditional industry,” said Subinder Khurana, founder and CEO, BankSmarts Solutions, a startup in the analytics space.

Startups that have got Series-A funding are looking at people for their product management functions or to ramp up their product base.

Ashutosh Khanna, co-founder and director of WalkWater Talent Advisors, a Bangalore-based leadership headhunter focussed on start-ups, points out that many employees are getting ESOPs over the last few years as some exits, second or third round of funding by venture capitalists (VCs) and M&A have happened in the sector.

“This has created awareness about ESOPs and lot more people are willing to see that as part of their compensation. There was an employee who was getting paid Rs 1.2 crore and then joined a startup with Rs 35 lakh package and stock options. We are starting to see this trend gaining strength,” adds Khanna.

Karthik Reddy, managing partner of the R100-crore seed funding firm Blume Ventures, feels that series A-funded companies are in a better position to hire experienced candidates as they don’t have much of a cash constraint.

“Such startups don’t have a problem pricing ESOPs and there are bigger VC brands associated to make them more confident about joining start-ups.” Among Blume's portfolio of around 55 companies, only a few companies such as Mettl, ZipDial or MobStac can afford to hire at market rates.

“Today we don't find it that difficult or challenging to sell a startup company to a candidate. There is a maturity in candidate pool and openness," said Mathur-Gandhi.

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