Startups employees to receive less than historical pay hike this year

Employees at the startups have been enjoying double digit hikes since last 2-3 years, however, they are up for a rough ride this year. As per a recent Aon Hewitt report, average increments at the domestic startups is expected to be at modest single digits as investors aren’t doling out funds as they used to do earlier, and also the firms are going tough time financially. Salaries, the alluring factor startups were using to recruit talent and also the largest cost head for them right now, have become a target since investors who bankrolled startups for years, expecting to make big returns someday, have become cautious as companies continue to burn cash to remain relevant in segments such as the intensely competitive consumer Internet business. Thus the startups are squeezing expenses due to the pressure from investors to turn profitable. A recent

As per the study, the average pay hike by consumer Internet companies in the startup space is predicted at 12.4%, which is still the highest across industries. However, experts are not convinced with the higher figure as they are of the view that the companies that participated in the survey seemed to have underestimated their growth pangs. Rajeev Banduni, chief executive of advisory services firm GrowthEnabler, said that “I will be surprised if people get more than 5-6% raise. The supply of talent far outstrips demand. Startups this year are going through maturity curve and growth pangs”.

Even some of the startups are already disclosing their plans for lower increments. Hari TN, HR head at Big Basket, expects pay hike at the startup to be in the range of 8-10%, compared with around 12% it paid last year.