<article>When funding was easily available last year, several startups in the e-commerce and consumer space, such as <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=Flipkart" target="_blank">Flipkart</a>, <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=Snapdeal" target="_blank">Snapdeal</a> and <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=Zomato" target="_blank">Zomato</a> went all out to hire talent at all levels.</article>

When funding was easily available last year, several startups in the e-commerce and consumer space, such as <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=Flipkart" target="_blank">Flipkart</a>, <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=Snapdeal" target="_blank">Snapdeal</a> and <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=Zomato" target="_blank">Zomato</a> went all out to hire talent at all levels.
Many of them — including their best top-level hires — have left this year. As have those who were hired at lower levels. This did not happen just because getting funded has become slightly tougher. But because last year was marked by a series of poor judgements by India&#8217;s most valued startups.
The manpower they had hired turned into a liability.
Here is a list of some of the prominent hires who left:
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&#8220;Having more money does not help if you start throwing people at problems,&#8221; said Siddharth Talwar, co-founder and partner at <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=lightbox" target="_blank">Lightbox</a>, a venture capital firm based out of Mumbai, India. &#8220;I have seen this happen particularly in India.&#8221;
Between 2013 and 2015, the Indian startup ecosystem attracted hundreds of millions of dollars in funding, with last year setting a record. Instead of using the money to beef up technology and processes, hiring was done at a rate unheard of before. That included freshers out of top colleges, senior executives from major companies such as Tata Group and Reliance, and really expensive hires from the Silicon Valley, who had experience of scaling up startups to higher levels that Indian managers did not have.
Also read: Indian internet startups have a &#8216;soaring salaries&#8217; problem
&#8220;Most people came from traditional companies or startups abroad. They had the right kind of experience but the environment created by founders of top startups here was not a good fit for them. Some of them are now facing financial trouble and are laying them off,&#8221; Talwar said.
That has led to hiring being at its lowest level since 2012. The top startups are finding it difficult to attract top talent. And last month, in a controversial decision, Flipkart postponed the joining dates of new management graduates by six months. It was not alone — <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=InMobi" target="_blank">InMobi</a>, <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=RoadRunnr" target="_blank">RoadRunnr</a> and <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=CarDekho" target="_blank">CarDekho</a> were among other bigger startups that did the same. They had all been part of the hiring frenzy last season.
As an indication of how much over-hiring was done, consider that Flipkart had 33,000 employees last year. That is almost as big a workforce as that of much-bigger Chinese giant <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=Alibaba" target="_blank">Alibaba</a>, which had had 34,081 employees at the end of 2014 and announced it would cap it at that level. <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=Uber+Technologies+Inc" target="_blank">Uber</a>, the worldwide ride-hailing startup with operations in 70 countries, had less than a thousand employees until 2015. In comparison TaxiForSure had 1,800 before it was acquired by <a href="http://www.dealstreetasia.com/?s=Ola" target="_blank">Ola</a>.
Unlike the IT and IT-enabled services space —where bench strength and more hiring is seen as a good thing — high hiring levels in startups are usually an indicator of spiraling costs.
&#8220;I personally know some of the senior hires who left,&#8221; said Ashish Taneja, managing director at Delhi-based growX ventures. &#8220;There was an expectations mismatch. They were paid huge salaries and expected to change the world in a few months. But this was a different environment for them. They were used to more process-oriented, decentralized decision-making. But here founders control those decisions so they did not get a free hand to build what they had been hired to build,&#8221; said Taneja.
The poor decision-making when it comes to hiring might continue, given that these are tough decisions to make. &#8220;Hiring is the most difficult decision for a first time entrepreneur. We have a team just to help the with that issue,&#8221; Talwar said. But without more money at their disposal, less of such decisions will be made this year, bringing a temporary halt to reckless hiring.
However, the situation is not all bad. While the startups that made poor hires suffered unfinished projects while paying out high salaries, there were some cases where the startups realized early-on that some of the new hires were not working out and went for a managed exit. &#8220;They were quickly asked to move on after they failed to meet their objectives,&#8221; Taneja said.
Also, while several startups have struggled with funding issues after hiring more people than they could afford, letting go of employees is not always a sign of trouble. &#8220;In India some 600-700 startups got funded last year. Sure some of the better known ones are laying off and losing money but that&#8217;s not an industry issue,&#8221; said Talwar.
&#8220;Resources that seemed bountiful last year have become limited so the startups who hired a lot are now letting go of people to keep costs under check,&#8221; Taneja said. &#8220;But startups in the finech and SaaS space are hiring. They don&#8217;t need large workforces.&#8221;
Also, while some of the top Silicon Valley hires have left startups, they have not left India. Some of them like Punit Soni, who joined Flipkart from <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=Google" target="_blank">Google</a> last year and left the e-commerce company in April, has decided to start his own venture in India. And bigger companies such as <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=Rakuten" target="_blank">Rakuten</a> and Alibaba have announced formation of India-based teams. &#8220;Those will offer new hiring opportunities and are likely to be large teams,&#8221; said Taneja.
Also read:
<a style="color: #ff0000;" href="http://www.dealstreetasia.com/?s=startups+hiring" target="_blank">Indian Institutes of Technology blacklist six startups from campus placements</a>

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India: Poor judgement in hiring led to recklessness, high costs at startups

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