Indian startups gave employees salary increments ranging from 8 to 12 percent on average in the financial year 2022-23 (FY23), according to a report released on Thursday.
According to Elevation Capital’s ‘Startup PayPulse Report 2023,’ performance accounted for 50% of the weightage in salary increments, with additional responsibilities and receiving a promotion accounting for about 20%.
Employee stock options (ESOPs) remain a key component in increments for senior leadership roles. Given the muted cash increments in the previous financial year, 50% of startups considered offering additional equity grants to leaders.
“In the face of macro challenges, Indian startups are showcasing adaptability by offering inflation-led salary increments to attract and retain talent. However, the variation is significant, with technology professionals in small to mid-size startups seeing moderate increments,” said Kallan H, VP — talent, Elevation Capital.
“We are observing a cultural shift in how ESOPs are viewed by employees and startups, with higher buy-in at the leadership level. We anticipate demand for AI (artificial) talent to stay elevated going forward, followed by product, engineering, and other functions,” he said.
ESOP allocation typically accounts for 10 to 50% of the cash component offered to candidates for entry-level to mid-level roles in the startup. Those in leadership positions receive ESOPs ranging from 0.2% to 1.5% of a company’s equity.
“Given the muted cash increments observed in the last financial year, 50 percent of companies have explored offering additional equity grants to leaders,” said the report.
“The shift in the market situation has led to a correction in salaries, though largely at the leadership level. Interestingly, job seekers are willing to wait longer for the right job opportunity than settle for less-than-ideal pay,” said Dipesh Jain, AVP — talent, Elevation Capital.
Bangalore and Hyderabad ranked first and second in technology talent availability in India, with a combined share of 72%.
Some critical roles filled among the first few hires at early-stage companies include chief of staff/founders’ office, growth, and finance.
The number of startups in India increased from 350 in 2014 to more than 90,000 by 2023. There are over 100 unicorns (privately held startups valued at over $1 billion).
This report included data from over 200 startups and over 1,000 candidates, and it was reaffirmed by recruitment consulting partners FIDIUS Advisory and Transearch.
