With the emphasis on the startups of startups like Flipkart and Ola, they have been brake on the magnificent increase in the salaries of their employees. The salary of these employees was 3-4 times higher than the industry average, but now they are matching their counterparts in the traditional sectors. Most employees involved in food tech, cab aggregation, classified and hospitality startups in the financial year 2017 were poor, and their average salary increase was 10-12 per cent, which were offered by these companies for 30-40 per cent in 2015 and 2016. And it is much less than 20-25 per cent growth.
In the last year i.e., 2016, where the funding of startups has faded, there is a need to cut the expenses and tighten the cash to increase revenue for these players in 2017. Investors want a way to gain profits, hence the impact on the cost of the employee has also been affected. The number of employee costs for startups is highest after the number of ad spend.
Many sources told ET that many employees of Ola Cabs, Jomato, Swigi and Oyo Rooms received only salary hikes of 5-7 per cent. Some employees with high performance got 15-20% increase in salaries this year. An employee of Ola said on condition of anonymity, “Most employees’ salaries increased by 8-12 per cent. The employees of the departments directly related to them were successful in achieving 20% increase in their salaries. There was no reply to the email sent to Ola in this regard.
Industry experts said that the decline in salary increases is natural for the industry, which was in difficult condition for cash for two years. Most startups said that this year they need to fix their valuation. To achieve the correct valuation, they will need to show less losses, better margins. For this, they will have to reduce the cost.
Employee Cost is the biggest fixed cost for these companies. The average increase was about 10-12 per cent, while in some important departments, salary increased by 20 per cent. However, the increase in salaries in senior management is 6-7 per cent.