The majority of India’s 100+ unicorns have reduced their appraisal budgets for 2023. This is because startups are increasingly looking for cost-cutting measures in the face of a protracted funding winter and worsening macroeconomic headwinds.
According to data from Aon commissioned by Moneycontrol, about three out of ten unicorns have budgeted little to nothing for increments this year. Unicorns’ average budgets for appraisals have decreased from 12.1 per cent in 2022 to 7.7 percent of salary expenses in 2023.
Mayank Kumar, cofounder of upGrad said that while some companies are abstaining from giving appraisal, others are delaying it by two to three months as they are expecting “ an average churn of 7 per cent per month to rule out close to 15 per cent eligible staff before the appraisal is disbursed.”
The edtech unicorn has already finished distributing revised salaries as of April, the first month of this fiscal year, said Kumar. Startups are not the only ones experiencing cuts. According to the data, one in five Indian companies has allocated little to no money for appraisals this year, and the average salary increase has decreased from 12.4% in 2022 to 8.2% this year.
Startup cost cuttings
The trend comes following the aggressive hirings that the startups made amid immense investor interest and multiple fundraising rounds in the year 2021. Technology startups are now vying to become profitable by eliminating the excess as the funding pipeline is closing.
Reducing employee benefits, which skyrocketed a year ago, is the first item on the list. Undoubtedly, Indian startups have fired close to 25,000 workers since the start of 2022 in an effort to cut costs.
Reducing employee benefits, which skyrocketed a year ago, is the first item on the list. Undoubtedly, Indian startups have fired close to 25,000 workers since the start of 2022 in an effort to cut costs.
While layoffs have helped to some extent reduce expenses, according to Anshuman Das, CEO of Careernet, this year’s emphasis on frugal living will have an impact on raises and bonuses.
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