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December 11, 2023

As funds dry up, hiring in tech startup sector expected to take a backseat

As the Indian tech startup ecosystem faces a significant dip in funding, the consequences are rippling through the hiring landscape, prompting startups to adopt a more strategic and cautious approach to recruitment. 

The Annual India Startup Report: 2023, released by Tracxn, reveals a notable decline in funding across all stages, with late-stage funding plummeting over 73%, early-stage funding by 70%, and seed-stage funding by 60%. 

This funding downturn is forcing tech startups to streamline their operations, with a particular focus on minimizing expenses related to hiring new talent. Startups are now hiring at a substantially reduced pace compared to previous years, leading to extended timelines for decision-making in the hiring process. 

As witnessed, companies are now prioritizing employee upskilling and in-house productivity over rapid expansion, resulting in a more deliberate and strategic hiring scenario.  

Bhavesh Goswami, Founder and CEO of CloudThat, predicts that adaptable startups will thrive by adjusting their business models to meet evolving investor expectations, demonstrating a keen awareness of market dynamics and a commitment to building resilient, customer-centric enterprises. Instead of traditional hiring, companies may focus on upskilling existing talent with new-age skills and integrating technologies like generative AI to optimize productivity. 

Niche skills such as AI/ML, cybersecurity, data science, cloud computing, and blockchain are expected to witness increased demand, presenting new opportunities for tech startup aspirants. While tech graduates may find limited opportunities, this downturn could be advantageous for startups that are still in a hiring position. With less competition for top talent, startups can potentially build high-quality teams that might have been challenging to assemble in a healthier market.  

A decrease in startup funding is reshaping the hiring landscape, pushing tech startups towards sustainable growth models, and fostering a more selective and strategic approach to talent acquisition.  

You can read more on this article from the  The Week penned by Bhavesh Goswami