Employees are shifting to Information Technology (IT) sector companies after well-funded start-ups sacked employees, citing a funding crunch. Nearly 50 per cent of the employees that left start-ups have joined the IT ecosystem according to data shared by Han Digital, a talent consulting company.
While 20 per cent of them joined IT services and big four consulting companies, 50 per cent joined product companies and the other 20 per cent joined the Global Capability Centres (GCC). “Surely this percentage will increase if we get to hear start-up layoff news intensify in near future,” Saran Balasundaram, Founder and CEO, Han Digital added.
Start-ups had earlier wooed employees with fat pay cheques, fancy perks, and other employee benefits when the ecosystem was blooming with high valuations and funding. But now as the funding has slowed down and valuations are being affected, well-funded start-ups have laid-off hundreds of employees.
Recently, unicorn start-ups such as Cars 24, Unacademy, Meesho, Lido Learning, and Vedantu have sacked employees citing role redundancy and funding crunch. It is estimated that over 3,000 employees have been laid-off across start-ups, in the past few months.
Caution in the air
IT firm Happiest Minds Technologies also thinks that with the recent news of layoffs by well-funded start-ups, candidates are seeing the start-up segment with caution. “We expect this change in perception will improve joining ratio and positively impact hiring efforts of IT services companies,” said Sachin Khurana, Chief People Officer of the company.
The Indian IT services companies, Infosys, Wipro, TCS, Happiest Minds, Mindtree, among others, have recorded high attrition rates in the past few quarters. In Q4, FY22, Infosys, TCS, and Wipro recorded attrition rates of 27.7 per cent, 17.4 per cent, and 23.8 per cent, respectively.
Further, Rituparna Chakraborty, Co-Founder and Executive Vice President of TeamLease, an HR services company said, “Although this does open a talent pipeline for IT companies, start-ups sacking employees alone won’t help IT companies meet their talent requirement or plugin attrition.”
Published on
May 29, 2022
