2021 in Retrospect: Golden Year for Talent Hunt & Perks; Not So Much For Diversity
Magazine, Special Feature

2021 in Retrospect: Golden Year for Talent Hunt & Perks; Not So Much For Diversity

, Senior Manager - Editorial & Content, Naukri

A review of the interesting developments of 2021 will reflect how last year could very well be considered a Midas year when it comes to perks showered for talents, together with employee stock options going mainstream.

News reports peg that 32 Indian startups have spent close to Rs 3,000 crore (about $440 million) to buy back employee stock options in 2021, up from 12 companies that reportedly bought back close to $50 million worth of ESOPs from their employees in 2020.



The buoyancy was a reflection of India’s startup growth story where a record number of companies raised capital at unicorn valuation, the stellar listings besides the massive demand for talent in the market.

In this year-end roundup story, All Things Talent is consolidating all the employee interesting developments that took place in the last calendar year and showcasing them through numbers with an HR lens like how did the top money-spinners do on their board-level gender diversity, what did companies with blockbuster IPOs do on their attrition rate, etc.

IPO: Top Tech Companies 


In 2021, the Indian startup ecosystem went past three remarkable milestones — the overall funding crossed the $100 billion mark (Rs 7.5 lakh crore), a record-breaking 40 startups turned unicorns, and 11 Indian startups listed on the stock market.

According to a study by Inc42 Plus research, nine of these startups have already made their secondary market debut and have a cumulative market cap of over $56 billion.

“Taking account of only the public market, overall sixty-three Indian corporates raised an all-time high Rs 1,18,704 crores through mainboard IPOs in 2021, according to data from primary market tracker Prime Database. This was nearly 4.5 times the Rs 26,613 crores raised through 15 IPOs in 2020 and almost double the previous best year of 2017 in which Rs 68,827 crore was raised.”

A separate analysis of the data by ATT found that the tech companies garnered a lion’s share of the total capital raised in the public market. For example, only the top eleven tech companies (Table 1) that went public have cumulatively raised capital of close to Rs 70,000 crore.

The Covid-led digitisation coupled with the convenience of remote working has opened up the job market to the world. With a war-chest of capital, most of the companies sank the capital into hiring top talent.

The Covid-led digitisation coupled with the convenience of remote working has opened up the job market to the world. With a war-chest of capital, most of the companies sank the capital into hiring top talent. Click To Tweet

The business banking platform of Razorpay studied the payroll data of over 25,000 employees across 360 startups in India from 15+ sectors in the six-month period i.e. from April 2021 to September 2021. They found that total salary spending has increased by 43 percent during this period, according to a September report by EconomicTimes that cited the study.

Looking beyond the overwhelming numbers on capital raised and salary is given, we attempted to see how these companies fare on their human capital, say board diversity?

These companies (Table 1) employed a total of 97 board members. For ease of counting the number of boards, exchange data was referred. This data puts compliance officers and company secretaries as part of the board member and these roles have been included in the computation.

Out of total board members, only 29 percent (a lot less than one-third) were women directors. This is significantly low for the kind of capital that was raised by the new-age businesses.

On a company-level comparison, the only exception is the online food delivery and restaurant discovery platform Zomato, which inducted four women directors in the month of April, in the run-up to its IPO.

Aparna Popat, professional badminton player, and ex-Olympian; Gunjan Tilak Raj Soni, CEO Zalora Group; Namita Gupta, founder of Airveda; and Sutapa Banerjee, ex-ABN Amro, and ANZ Grindlays are the four women to have joined Zomato’s board.

The other company that did comparatively better from the perspective of women’s board representation was Freshworks, followed by Nykaa and MapmyIndia which had exactly one-third of diversity representation. It should also be noted that Freshworks is listed in Nasdaq, which oftentimes seeks explanation on the lack of diversity in the board.

For example, a December 2020 report says that Nasdaq filed a request with the Securities and Exchange Commission to require its 3,300 listed companies to have or explain why they do not have at least one female board member and one board member who identifies as either an under-represented minority or LGBTQ+.

On the other hand, both Nykaa and Mapmyindia are led or co-led by women founders and had a big bang debut in the market.

Among the top listed companies by size, the story is still the same. (Table 3) Policybazaar and CarTrade were moderately better when compared to the others in the list.

Unicorns on Talent Hunt


According to a report by VCCircle, another milestone for the industry is that a total of 42 unicorns were created in India in 2021, as compared to just 11 in 2020 – an almost four-fold jump over last year. Cumulatively, these unicorns have raised more than $12.5 billion in fresh capital from investors this year. There were eight unicorns minted in 2018 and nine in 2019.

Following the fundraise, several of the companies announced their plan to make large hirings. A simple study of these announcements from 16 companies indicates they are going to hire close to 18000 people in the near future. While Ola Electric became a unicorn in July 2019, its business was still fledgling then and announced its massive hirings much later.

If Ola Electric is left out as an outlier, the overall hiring numbers are still significant. The second on the list, Dealshare announced its intention of hiring 5000 employees following its fundraiser.

In an October interview with All Things Talent, Sankar Bora, Founder and COO, DealShare.in discussed the key challenges in terms of talent availability and the value of ESOP.

“DealShare is at a rapid growth stage. We are aiming to strengthen all teams and departments across the board, with a strong focus on strengthening the tech and product teams. We are actively hiring engineers, product managers, operations enthusiasts, human resources to name a few’’, he said on the company’s talent needs.

The talent needed was across the board. Several media reports say that startups like Zomato, Swiggy, Amazon – are seeking to hire mostly in the tech profiles – and others like Nykaa, Mamaearth, Flipkart, Upstox, and Cars24 are among the companies scouting for CXOs and leadership roles across various teams, a July Times Now report said.

Potentially, all the unicorns and potential unicorns hired close to 65,000 executives over the last 15 months period, the article said citing a survey.

According to a report by Naukri JobSpeak (June 2021), in June, the demand for candidates in the IT software and services sector was 55 percent higher than in January. The demand for tech talent continued to soar as the sector witnessed a significant 85 percent Y-O-Y growth in October.

However, while the demand for talent with digital skillsets was at an all-time high, the number of people that actually possess these technical abilities was low. Because of the scarcity of qualified candidates, a massive war for tech talent broke out, forcing employers to engage in all-out recruiting battles for these individuals.

Harshit Chhaya, Associate Director – HR, Avail Finance in an article for ATT explained how this acute demand led to a dearth of valuable employees in the IT industry. “The demand for tech talent is so high that Tata Consultancy Services in the month of July onboarded 43,000 new engineers – an unprecedented figure by even Tata’s standards. As companies scout for more talent from an increasingly limited pool of candidates, inflated salaries and higher dropout rates are extremely common”, he further explains.

Attrition Rate among the Listed Companies


Several organisations are faced with the problem of ‘The Great Resignation’ which has put the businesses in a tricky position. It has been projected that more than half of the employees plan to look for a new job in 2021, opined Manavi Pathak, Head, Talent and Leadership Development, TATA Trent in an AllThingsTalent article in September last year.

In the case of Paytm, which was by far the largest issuance in corporate history, suffered over 50 percent attrition rate in FY21. It also faced roughly 40 percent attrition rates in the financial years ending March 31, 2020 and March 31, 2019.

Every company is facing a higher attrition rate than it had a year ago. In fact, this level of attrition has not been seen in the last 10 or 12 years, especially in IT and digital companies. IT services firms are not just hiring to meet growing demand but to also plug gaps created by the sharp increase in attrition within these companies.

Speaking to ATT, Richard Lobo, Executive Vice President & Head Human Resources, Infosys attributes the high attrition to several factors – from new technologies and skill requirements to talent supply disruptions (both in terms of the shift toward remote working and people moving out of the workforce) to businesses not making sufficient investments to skilling. “The combination of these three has led us to a time when the demand situation is at the maximum. That is what has resulted in a short-term supply situation. I don’t see this as a long-term issue. It is more of a balancing situation for the post-pandemic boom”, he explains.

In its draft papers, Paytm gave a peek into the reason behind the massive attrition. “We face intense competition for highly skilled employees especially as part of our product and technology team’’.

It had an average of 2,550 members in the engineering, product, and technology team in FY 2021 and 2,471 members in the engineering, product, and technology team as of June 30, 2021. It’s roughly about 25 percent of its employee strength.

Paytm Services Private Limited provides short-term manpower hiring and placement including the provision of sales field executives, which traditionally have much higher attrition than the rest of the organisation.

To attract and retain top talent, the company had to offer, and continue to offer competitive compensation and benefits packages. “Competition for talent in the Indian internet industry is intense, and we may need to offer more attractive compensation and other benefits packages to attract and retain them’’, it added.

Another fact to be noted is that financial services companies, in general, have faced a higher attrition rate. Besides Paytm, payments bank Fino had an attrition rate of over 50 percent in the last three years.

Democratising Wealth Creation for Talent

ESOP Buybacks in 2021

Job security in large and mature companies is always assured for employees. However, the same cannot be said for startups as they struggled to attract talent for a long period of time, particularly during their early phase of the business cycle. This is where several of them utilised stock options as an effective tool.

In the early 90s, employee stock options were novel and untested, but in 1993, when Infosys listed and unlocked value for thousands of employees—including, as the myths go, for a few early-stage blue-collar staff—this form of compensation drew attention, writes T.N. Hari, head of human resources (HR) at BigBasket for a Mint article in November last year.

“It demonstrated for the first time that if you were talented and took the risk of joining a startup in a key position at an early stage, you could probably make enough money that would make the traditionally wealthy look poor in comparison’’, he adds.

The option is better known as the Employee Stock Options Program/Plan (ESOP) or the Virtual Stock Option Program (VSOP). It is an option for employees to exchange parts of compensation for a stake in their employing organisation’s equity structure. An ESOP is essentially a long-term incentive granted to employees to buy or subscribe to the company’s shares at a predetermined price.

“In the early 90s, employee stock options were novel and untested, but in 1993, when Infosys listed and unlocked value for thousands of employees—including, as the myths go, for a few early-stage blue-collar staff—this form of compensation drew attention, writes T.N. Hari, head of human resources (HR) at BigBasket for a Mint article in November last year.”

READ more about the myths, fallacies, and green signals of ESOPs here.

This way, grantees are offered equity compensation instead of or in addition to their remuneration and in turn, become a part of the growth of the company and enjoy the sense of ownership thereby boosting the morale of the workforce. This ESOP/VSOP structure helps the organisations to negotiate salary structure with the employees and carefully strategise the manpower recruitment considering the cash-strapped status.

The hyper funding scenario, led by the investors, is also the reason why many startups are exploring ESOPs as part of their core agenda.

When it comes to the overall employee benefits, Rs 13590 crore was spent by the top 100 startups in FY20 compared to Rs 10570 crore in the previous financial year, shows a study by Inc42 research.

The study further states that formal employment creation by Indian startups is growing at a CAGR of 12 percent.

It highlights, based on a sample set of 82 startups between 2017 and 2020:

  1. 449k – Total number of accounts opened by Indian startups with employees’ provident fund organisation (EPFO) in the past four years.
  2. Rs 36164 – The average annual contribution by Indian startups to the EPF account between the financial year 2017 and 2020.
  3. 112k – The number of EPF accounts annually opened by Indian startups between the financial year 2017 and 2020.
  4. 4x – The number of times per employee EPF contribution was increased by Indian startups in the past four years.

If the pandemic has taught us anything, it is that employees want the organisations to be more human. Nothing can take the place of pay, bonuses, and benefits. But the employees crave shared identity and purpose, wealth creation, a sense of belonging, and interactions.

For any startup, choosing the right plan becomes immensely critical.

The factors that impact decision-making are manifold. Other than the typical parameters of the type of organisation, valuation, funding, etc, other parameters like type of workforce, tax efficiency in multiple locations, impact on employees, legal and regulatory clarity on different plans also affect your choice.

READ more on this process is dissected using a ‘decision tree’ model.


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