'Took the rose, but the thorns hurt': Millennials who lost jobs rue working with start-ups

Ankit Sharma* is not very excited to work with start-ups anymore. He was working at a mortgage lending start-up, and was part of the mass lay offs that happened last year. Sharma had not even completed a year there.
 
This company, he shares, at one point was a well-funded start-up backed by several top investors of the world. Today, it is struggling to survive, he says.
 
He has now joined a financial services legacy business but at a lesser pay. He says he would choose job security over more money any day now. After being laid off, he shares, it took him three months to find another job. A lot of companies were not ready to pay him the salary he was rooting for because the pay he was getting earlier was way too high.
 
“My previous workplace had raised the standards when it came to rolling out salaries. Our allowances which were over and above our CTC really made it a good package,” he tells Business Today.
 
Sharma’s fixed pay was around Rs 60,000 per month and his allowances had him pocket Rs 10,000 more.
 
V Srikanth* is another employee who was working in an edtech unicorn and was laid off in July this year. He says that the start-up overhired and even manipulated its growth numbers. He says now that funding has dried up, it is struggling to be profitable. 
 
Srikanth is now working at an MNC. It took him approximately two months to find another job. He cites micro-management as one of the reasons why start-ups are failing. He further said that in established legacy companies or MNCs, the KRAs are set and that smoothens a lot of creases in the overall operations.
 
According to some data shared by Foundit (formerly called Monster.com), start-up hiring in November declined as compared to October this year. For instance, in internet start-ups, hiring declined from 55 per cent to 43 per cent in October versus November. 

 
Should we be worried?
 
The companies which were once considered iconic are today hitting headlines for mass lay offs, spending significantly on marketing and advertising, setting unachievable targets to drive out employees, toxic culture, and more. 
 
The situation when you speak to the laid off individuals seems intense but the investor community has a different take. Rajiv Srivatsa, Partner at Antler India and the co-founder of Urban Ladder says, “I have seen this game for 10 years now thanks to Urban Ladder.”
 
He says that the lay off is a cyclical trend which happens every 3-4 years especially during market correction. “It's just the way this industry works.”
 
Anil Joshi, Partner at Unicorn India Ventures and a member of the Indian Venture & Alternate Capital Association, says that the layoff trend is prevailing not just in India but across the globe. He cites the examples of Amazon and Meta who joined the layoff bandwagon this year. 
 
These are well-known names but some of the lesser-known names like Polish edtech start-up Brainly too have jumped on the layoff bandwagon. The reason cited by the company was that it was “unable to maintain some of its roles” focused on development of its paid plans and products.  
 
In the US economy, so far 33 business cycles have been observed between 1854 and 2009, according to the National Bureau of Economic Research, of which the years - 1929 and 2009 saw the worst recession. Experts believe that these cycles have come after a great deal of economic growth thus indicating that a contraction after sustained growth is inevitable. This is what seems to be happening in India as well, they say.
 
Overhiring - A problematic trend?
 
The Indian start-up ecosystem stakeholders believe that overhiring is a problematic trend. 
 
Overhiring is a problem that not just the employees but people working on the policy front have also pointed out. Jidesh Kumar, Managing Partner at King Stubb & Kasiva, points that a mix of external and internal factors have hit the start-up ecosystem. 
 
“Global recession, investors tightening the fund flow tap and an unsustainable hiring process have all jointly contributed to the huge layoffs by the startups.”

He says it is disturbing to see start-ups overhiring when there are enough funds but driving away people when funding dries up.

“Startups got into a competitive hiring spree with simple termination conditions and when tough times came, they exercised their contractual right leaving employees who had surrendered their rights meekly for quick but unsustainable growth with no remedy,” he says.
 
Srikanth echoes on this point and says that his onboarding process was “super quick.” He says, “I had a video call with my reporting manager and the offer letter was rolled out just two days later.”
 
Sharma says that the onboarding process takes weeks and months in some cases. But the start-up that hired him hardly took three days. “I was excited to work with the start-up and aspired to join them since my college days so I didn’t think much,” he says.

He now feels the burden of the decision he made. 
  
“The employees can't do anything different since they all signed the pink slip agreements. They took the rose but are now getting hurt by the thorns,” Jidesh states.
 
*Names have been changed on the request of the individuals.