Why Indian startups have a tough time hiring fresh talent

India has one of the world’s largest working-age population, but finding the right talent is a massive struggle.

Nearly two-thirds of the respondents in a Twitter survey by Vijay Anand, CEO and founder of The Startup Centre in Chennai and known as “The Startup Guy” on the microblogging site, said they believe India has a shortage of talent to build world-class startups. Much of Anand’s follower list comprises of Indian startup ecosystem players from founders to venture capitalists.

“I’ve been noticing that whenever there are two or three fast-growing startups in the ecosystem, founders start complaining about talent drain and everyone getting sucked into it,” Anand told Quartz.

To be sure, India has struggled with poor tech talent for several years now as the country’s ages-old rote-learning model makes people book smart but lacks analytical and practical teachings. Less than 5% of Indian engineers can write functionally and logically correct code.

Startup seduction

While talent shortage is a problem across many industries, startups face some peculiar challenges. For one, working with a young and small company is not the oft-chosen career path. “Multinational companies have a brand value and a stable system that gives them an advantage in reach,” said Kunal Patil, co-founder of WorkIndia, a geo-positioning app that helps in connecting blue- and grey-collar workers with potential employers. In addition, startups can’t always offer exciting salaries.

In some cases, even geography works against startups. For instance, Akash Gehani, co-founder and chief operating officer of Instamojo, as well as Adam and Patil, struggled to find tech talent for their Mumbai-based ventures as the prime talent was concentrated in IT hub Bengaluru. Patil and Gehani both shifted base to Bengaluru and have since found it easier to hire the right talent. “Every startup [should] be in a startup ecosystem like Bengaluru, Delhi-NCR, or Hyderabad,” Patil said.

If entrepreneurs can’t find the right talent in India’s financial capital, it’s obviously a near-impossible task for startups that are based in non-metro cities. “Talent with expertise in building large scale applications is the toughest to find given that only a handful of Indian companies have seen this scale,” Farooq Adam, co-founder of fashion e-commerce site Fynd. “Talent with relevant experience and from the startup ecosystem comes with a mercenary attitude – shops for offers around and is always looking for greener pastures,” Farooq added.

A flawed system

Recruiting resources are few and far between still. Arpita Ganesh, co-founder and CEO of online lingerie brand Buttercups, met her co-founder and technology head Aaditi Sinha in a chance meeting. “It is extremely rare to find brilliant Ruby coders, leave alone a female one,” she told Quartz. After some convincing, Sinha moved from freelancing to a full-time role.

However, building the team thereon out was a struggle. “We usually look for referrals and our go-to was Hasgeek.com. But we still have trouble finding the right talent, no matter where we look. It’s a long drawn and tedious prospect to hire great tech people,” said Ganesh, who sold Buttercups to CK Texstyles to operate as an Amazon-only brand last year.

Most companies are parsing through job portals like Linkedin, Indeed, and Angellist, among other such channels, competing to get their hands on the best talent. However, the search often draws a blank – at all experience levels.

“Most fresh graduates from engineering colleges in India are not ready to build such huge software applications,” said Kashyap Matani, co-founder of Yocket, a five-year-old Mumbai-based ed-tech startup for students who aspire to study abroad. “Even among experienced developers, it’s challenging to find people who have an understanding of writing software, which not only works, but is also easy to maintain, efficient, and secure.”

While fresh graduates lack fundamental skills, experienced talent is not up to date with the latest know-how. This is especially an issue with more niche areas like internet-of-things, artificial intelligence, and machine learning.

The churn at some of India’s most prominent startups in the last month alone is a testament. Late last year, reports said ride-hailing unicorn Ola and online classified major Quikr were reducing their headcount by over 15% and 30%, respectively. Less than two weeks into 2020, American retail giant Walmart let go of over 100 top executives in the country. At its heels, hotels group OYO has laid off 2,400 people, or 20% of its workforce, to cut down costs and streamline operations.

“Some roles at Oyo will become redundant as we further drive tech-enabled synergy, enhanced efficiency and remove duplication of effort across businesses or geographies,” founder and CEO Riteish Aggarwal wrote in an internal email.

Hiring in big numbers has clearly done little to help the industry in the face of a chronic skills deficit. But companies are finding workarounds.

Looking for jobseekers

One solution is to hack on-the-job training. “Companies can help build better talent by sponsoring short courses that help develop specific skills,” said Matani. “They can also encourage their workforce to contribute more to open source projects and be more active on online technology communities. This will build a very good ecosystem.”

Fynd, for instance, runs an internal programme where engineers are moved periodically across the tech stack to increase exposure. “If you were to start your own company right now, who would you want as your co-founders?”

Employee referrals are also a safe bet. For instance, Pathik Shah, CEO of DB Digital, Dainik Bhaskar group’s digital products arm, asks new hires and existing team members to refer the best people they have worked with. “That improves the chances of getting the right skill set, as well as the right mindset which will fit into your culture,” he said. “One great question to ask them is, ‘If you were to start your own company right now, who would you want as your co-founders?’”

A handful of entrepreneurs told Quartz India that global talent can bring in diversity and fresh perspective. This is also important for startups that intend to expand to other parts of the world. For example, to be a leader in a foreign market, it can be helpful to have people who come from that culture.

However, India’s size and diversity make it a unique challenge. From language and demographics to purchasing power and mobile usage, every little factor is different as you move around the country. “Global talent is great on skills but their aspirations, purpose and mission orientedness, and expectations need to match to what we are solving,” said Karthik Venkateswaran, CEO and co-founder, online food and grocery marketplace Jumbotail.

Plus, the investment can be expensive but to little avail, experts warn. If past is precedent, burnout is anyway common among the cohort that can’t always make peace with the harrowing work culture, red tape, and stalled innovation in India.

Education first

While approaches vary, there is one thing that every founder agreed on: the work needs to be done bottom-up. Overcrowded and understaffed educational institutions need to be reformed, moving away from being theoretical and towards being industry-aligned. Here’s some advice from half a dozen such leaders:

Divyam Goel, co-founder and CEO, AttainU: “To allow for rapid, mass acceptable innovation in the space, government should change the regulations around what is considered an AICTE [All India Council for Technical Education]-accredited degree. This has to be done carefully, keeping away players who might reduce the quality further.”

Rajeev Tiwari, founder and director, STEMROBO Technologies: “At [the] school or college level, students’ practical, hands-on learning should serve as a criteria for success. The need is that project-based Learning become an integral part of curriculum.”

Patil, WorkIndia: “These days, we are clearly seeing internship culture in few universities which are part of the curriculum which gives very good exposure to the students. Incubation centers within colleges or universities are pushing students towards entrepreneurship.”

Madhukar Kumar, chief analytics officer, Shine.com: “Educational institutes and organisations can employ leading online learning platforms that equip students and professionals with in-demand skills through curated courses and high-quality content.”

Hari Krishnan Nair, co-founder, Great Learning: “This is a good time for the government to step in with learning allowances for corporates, GST rate cuts and tax benefits to encourage professionals and organizations to work towards reskilling their talent and existing skill set.”

Krishna Kumar, founder and CEO, Simplilearn: “The government should look into revisiting the prevailing school curriculum and practices. Today, we see a great demand for a talent pool that can pursue part-time jobs post 12th standard. To establish this, the students require guidance in the form of career counseling in addition to at least one skill that they can put to practice in their workspace. Educational institutes need to design courses that are based on industry requirements.”

Shah, DB Digital: “It’s also a mindset issue. People who want to learn, will find a way to learn. People who don’t, will find excuses. Any mentor in the technology industry is a tweet away. All the information you want in any stream is available at the click of a button. The internet has everything and we have the cheapest internet in the world. It’s on every individual – do they want to Netflix and chill or watch viral videos on Tiktok, or do they want to learn?”

This first appeared on Quartz.