The Reason Behind The Unreasonable Salaries Of Indian Start-Ups
While the rest of the corporate India was awaiting their appraisals, there was hue and cry everywhere when people found out that Indian start-ups like Flipkart and Snapdeal offer their employees exorbitant salaries that are clearly a few lakhs above market standards.
My first question is: why are established and highly successfully companies like Flipkart and Snapdeal still addressed as start-ups by bigwigs like Tatas and Infosys? And my second question is: why are they complaining about the so-called ‘exorbitant’ salaries offered by these start-ups?
Talent Scarce
In a country like India, where the population is somewhere around a few billions, talent is a rare commodity. And, by talent, I mean good talent. A recent survey by the 2017 Startup Ecosystem Report states that engineers in Bangalore, the IT-hub of the nation, make a mere $8600 per year while their Silicon Valley counterparts make a whopping $112,000 a year. Even engineers from Beijing and Singapore make $25,000 and $35,000 per year — a clear 3X more than our own engineers.
Many surveys, reviews, and reports like these are proof that the while Indian education system is churning money, its products, the engineers who pass out of the system, are barely employable and with little or no job-related talent once they step out their college cocoons.
The Indian talent pool practically dry, with only 2% of its educated workforce falling under the ‘employable’ category, so it comes as no surprise that start-ups, whose only aim is to expand and grow, are willing to offer this employable category extraordinary pay packages.
Risk Vs Rewards
Start-ups tend to adopt the ‘risk-reward policy’ where they are more than willing to offer the risk takers great numbers in call letters. And who is to blame for that? While it is in common nature to sigh in grief looking at the huge salaries drawn by employees in start-ups, few are willing to take up the risk of working in a start-up.
Money matters
Start-ups too are very clever in their approach to money. They follow the carrot and stick rule. Employees who stick with them for a said number of years, but have the option to upgrade to stock and share options, or a mixture of both financial rewards and non-financial incentives.
The Future
So what happens to the employees if these start-ups fail and they are unable to find employment else is a dreaded question; but as of today, start-ups are left with no other option but to compete amongst themselves to find the best talent by offering employees salaries incomparable.
