Bigger companies like Flipkart, Snapdeal, others poach app developers from smaller firms like Namakh

BENGALURU | MUMBAI: Startups fattened on venture capital are preying on smaller peers for talent, sending salaries for the fortunate ones skyrocketing to levels seen at investment banks.

Finding the right engineering talent has become a bugbear for India's startup industry, as heavily funded ecommerce firms battle for command over mobile technologies that are reshaping consumer-facing businesses, often at the cost of smaller startups such as Namakh.

Debasis Chakraborty, founder of the online women's fashion store, has been struggling to find app developers to build a mobile presence for his nine-month-old startup. He nearly hired two app developers but they opted for meatier offers from bigger online retailers.

"All app developers are at large companies or they are running a startup themselves. There is no middle ground," said Chakraborty.

Well-funded startups are offering annual salaries of up toRs 30 lakh for product managers with experience of about five years, double what the person would get in a multinational firm, said Preetam Salian, chief executive of HiringMonk, a recruitment firm for startups.

"(Large ecommerce firms) don't want to waste time hiring from other large companies. People who have worked at a startup and identify with the culture are the ones they go after," he said.

Requirement for engineers with iOS and Android skills ranks above that for data scientists, according to hiring firm TalentPad, the demand coming primarily from Bengaluru based companies that have crossed Series C funding.

Indian startups and internet companies raised more than $5 billion in funding in 2014. More than two-thirds of that was funneled into five companies – Flipkart, Snapdeal, Quikr, Housing and Ola – allowing them to sign employees at huge cash salaries while also giving them an opportunity of working in a hot startup. ET identified at least seven startups whose employees were poached by larger firms, but they declined to be identified for fear of sending out distress signals to investors. Housing and Amazon did not reply to email queries. Flipkart declined to comment.

"We pay highly competitive salaries and have never lost out on good talent due to compensation," said Saurabh Nigam, vicepresident of human resources at Snapdeal."Compensation depends on multiple parameters like competency, specialisation and experience. We offer competitive compensation for talent across the board," said a spokesperson for Ola.One in every nine students from the 2013-15 batch across 11 of India's top B-schools were expected to join an ecommerce firm or startup after they graduate as compared to just one in 19 students from the 2012-14 batch, according to data ET collated from these schools in February.

Offers from the ecommerce/startup space have increased by 120 per cent in the past year, with starting salaries of Rs 16-20 lakh plus stock options.Flipkart in December was looking to hire graduate trainees and software development engineers from the Indian Institutes of Technology at annual salaries of Rs 12-15 lakh. Snapdeal offered salaries of Rs 17-18 lakh, including performancebased stock options – pay scales out of reach for smaller startups.

"Even one year ago, employees used to take 30-40 per cent salary cuts and take ESOPs when they joined startups. But nowadays, things are going in a very different direction," said Prateek Shukla, CEO of house rental site Grabhouse. A 40-100 per cent hike in compensation is the new normal, he said.

Some early-stage startups are adapting. Mumbai-based Shopsense, which builds software for retail analytics, is offering up to 1.5 per cent equity for a team lead of its platform, in addition to an annual pay of Rs 18-22 lakh. "In the market, the cash component for this kind of profile will be Rs 40-45 lakh," said CEO Harsh Shah.

"The only way companies like ours can get talent is by offering more stock options."Other early startups are hiring developers on contract for a couple of weekends, paying as much as Rs 1 lakh per project, said Karthik Prabhakar, senior associate at IDG Ventures India Advisors.He expects the fight for app developers will be short-lived. "In a year or two, you'll see more and more Android and iOS developers. It will become a balancing act."