Talent acquisition and retention challenges faced by IT Start-ups & SMEs in India

Talent acquisition and retention challenges faced by IT Start-ups & SMEs in India

It seems to be an Inverted Pyramid in case of Talent Acquisition and Retention

Tier I&II – There is a huge race in campus hiring where all BIG and well-funded IT companies are attracting bright students by offering them competitive salaries and BRAND NAME. Few caliber students with good soft-skills and technical skills get into decent established mid-size companies with decent pay.


Start-ups and Small-Mid-size Companies (Tier III)

Here is a quick peek at the burning issue.

Very few individuals or IT graduates are interested in working with Start-ups and Small-Midsized companies because of the low salaries offered as compared with the well-established companies.

  • Most of the prospective candidates prefer monetary benefits over technology and knowledge.
  • Many of them are not clear about what they want to do and what they are passionate about.
  • Societal and family pressure or expectation is to get a job in big and reputed IT companies.
  • Some see a ray of hope by doing some professional courses and struggle for a break (Training Institutes – Cartel).
  • Start-ups and Small-size companies end up compromising on soft-skills, technical skills and hire candidates with basic aptitude, average analytical skills.
  • In some cases, hiring happens through personal references and recommendations with a prospective of a long-term association.
  • Pay-scale is generally low, to begin with, but one gets an opportunity to work on cutting edge technologies and gets exposure to the entire IT life cycle.
  • In a year or two after putting them through a lot of on-job training, handholding, mentoring, they become the shining stars in the company.
  • Start-ups and SMBs can’t afford to keep the bench strength to minimize the dependency on such resources.
  • Individuals build their confidence and start to realize their importance in the organization as well as in the market.
  • There comes the annual performance appraisal, the company offers a decent 30/40/50% appreciation, in some cases 100% basis employee’s appetite and initial salary.
  • Suddenly, they believe valued and understand the dependability on them thereby their expectations start shifting. The standard of life develops needing more money. And of course, in some genuine cases there are family reasons as well.
  • Meanwhile, friends in other companies make more progress and they get attracted again towards Tier I/II companies.


The TIER I/II companies are looking for such well-trained and skilled resources from Start-ups to cater to their growing demand.


The TIER III companies take serious efforts to retain talent.

  • Work flexibility, interesting work, cutting edge technology, opportunities to grow, future roadmap, TRUST, BELIEF, core values, etc.
  • It sounds good to listen so they do listen, but in the end, it comes down to how much you can offer…nothing matters in most of the cases (It is like milage kitana deti hai…in one of those Maruti Suzuki commercial ads).
  • You take a pinch and try to offer little more, but that can’t be matched against the other offers from Tier I/II, so you are helpless.
  • If you are lucky, someone will stay with you by taking a lot of promises and commitments from you.
  • Someone will agree to all that you say but then will bring-in the personal issues: family pressure, marriage, buying a house, repay loans, comparison with other companies and candidates, etc.
  • You get Fed-up and feel bad about the situation, you will recap and think about how the same individual was so polite, good-hearted, committed, hard-working, trusted for the past two years.
  • In the end, you lose.

Wait! It does not really end there, it triggers the wave and you see suddenly rest all start thinking that “the grass is greener on the other side” and starts shopping.

You end-up repeating the same saga all over again. It feels like you are running a training camp. NO one is to BLAME. It is the FACT and you can’t run away from. You must need to learn to deal with this bitter reality.

 Strategies to Retain:

  1. Documented growth opportunities: If you make more money you can offer more money (profit sharing), so focus on growing the business, find new opportunities, establish yourself in your known areas, build products/solutions fast and get them out in the market, generate more revenue and profits.
  2. Communication and feedback: Keeping open lines of communication is a formal way of describing a practice that’s essential for employee retention. Your direct reports should feel free and valued to come up with their ideas, questions, and concerns.
  3. Training and mentorship: Continuous development of the skills as per the need, cross-skilling and pairing them with other employees as this brings a fresh viewpoint that brings growth aspects in the company.

**Otherwise, if you have deep pockets and you really believe in what you do and can afford the risk then spend more and hire experienced professionals or retain existing.


I know it is easy to say, but you have not many choices! Or else you are doomed.

Does this make sense or I am just thinking out loud here?











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