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Indian Startups Gear Up for 20-30% Hiring Surge Amid Funding Recovery in FY25
Team Finance Saathi
19/Dec/2024
What's covered under the Article:
- Indian startups are forecasted to boost hiring by 20-30% in FY25 as funding increases by 14% YoY.
- Key sectors such as fintech, e-commerce, and automotive to drive hiring growth, while telecom and BFSI hiring remains subdued.
- Attrition rates to stabilise, with salary expectations rising 5-7% amidst the recovery.
The Indian startup ecosystem is witnessing a positive shift, with hiring efforts set to increase by 20-30% in FY25, marking a recovery from the challenging period of layoffs and hiring freezes caused by the prolonged "funding winter." According to staffing firms, this optimism stems from a 14% year-on-year (YoY) increase in funding, which reached US$ 10.9 billion (Rs. 92,563 crore) in FY24.
Funding Recovery Fuels Hiring Surge
The recovery in funding marks a departure from the steep declines witnessed in recent years. Investment volumes dropped drastically from US$ 36 billion (Rs. 3,05,712 crore) in FY21 to US$ 9.6 billion (Rs. 81,523 crore) in FY23. As funding rebounds, startups are focusing on restructuring teams and aligning with long-term growth goals.
Key sectors such as retail, e-commerce, fintech, FMCG, automotive, travel, and hospitality are leading the hiring recovery, driven by robust growth and consumer demand. In contrast, industries like BFSI, telecom, healthcare, pharma, and energy may see subdued hiring, particularly in Q1 FY25.
Layoffs Decline but Challenges Persist
While layoffs have declined significantly—down 46% YoY to 8,895 in FY24 from an estimated 16,398 in 2023—major companies like Paytm, Flipkart, and Byju implemented large-scale layoffs, reflecting the residual effects of the funding crunch. Despite these challenges, hiring demand is showing signs of recovery, with startups reporting 20,000 active openings, though still far below the 45,000-55,000 openings seen during peak periods.
Role of Funding in Recruitment
Funding plays a crucial role in recruitment, particularly for early-stage startups. For example, a typical Series A funding round of US$ 10 million (Rs. 85 crore) often enables companies to hire around 25 IT professionals, underscoring the direct link between investments and hiring capacity.
Attrition and Salary Trends
The recovery in hiring is accompanied by stabilising attrition rates, offering a more secure work environment for employees. Average salary expectations are projected to rise by 5-7%, reflecting the improved market dynamics and demand for skilled talent.
Future Outlook
As the funding landscape continues to improve, the Indian startup ecosystem is gearing up for a period of sustained growth and expansion. The hiring resurgence signals a shift towards optimism, with startups focusing on building robust teams to drive innovation and scale.
The Upcoming IPOs in this week and coming weeks are Ventive Hospitality, Senores Pharmaceuticals, Carraro India, Solar91 Cleantech, Unimech Aerospace, Rosmerta Digital, Indo Farm, and Avanse Financial.
The Current active IPO is Transrail Lighting, Mamata Machinery, DAM Capital Sanathan Textiles, Concord Enviro, Newmalayan Steel, Identical Brain Studios and NACDAC Infrastructure.