Startups Or MNCs - Where Are You Headed After College? The year 2016 has seen a massive downturn, turning it into a year of uncertainty.
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Not very long ago, placement cells in B-schools and IITs were flying high in glory of startup growth in India. Students were going all out to get onto the lucrative "Start-Up bandwagon'. Literally some 365 days ago, it seemed like a win-win situation. The story, as we see it now, is different. The year 2016 has seen a massive downturn, turning it into a year of uncertainty. Entrepreneur analyses what the future holds for graduates in this climate.
The signs of "turbulent times ahead' were visible from October last year. Though it is impossible to predict the future, gauging trends is possible. Did placement cells in IITs and IIMs not keep a track and inform students?
The fact is that there are worries in the start-up eco-system and it is going through a phase of correction. For students, who are on the threshold of starting their careers, the tide is high and a lot is at stake. It is obvious to hope for a great career start after fighting to secure a berth in such top institutions.
What is the future?
Meet 23-year-old, IITian Akash Neeraj Mittal who hogged headlines for product listing-like presentation of his resume on Flipkart in March this year. His out-of-the box approach didn't help him get a job and he is now working on his own start-up in the organic food industry.
According to him, money is a huge deal for graduates. "One of the biggest factors is money, then branding and finally the growth opportunity. Graduates look for start-ups that are well-funded, have a good brand name and pay well," says Mittal.
At IIT Kharagpur, there are 1,500 graduates up for placements every year, the competition is fierce. The average package for IIT graduates is around Rs 9 to 12 lakh per annum. However, bigger start-ups like Amazon, Snapdeal and Flipkart have given students packages of up to Rs 18 lakh. Market expert, Arvind Singhal, Chairman of Technopak Consultancy says that blown-up salary packages are beginning to backfire.
"Initially, many start-ups were blowing up money as if there is no end. Greed was a motivator for graduates, as opposed to the excitement for working for a start-up. As funding goes down for some start-ups, salary packages also get low, resulting in students wanting to join bigger companies," he says. However, he adds that funding has still not dried up for great ideas.
Honey, it's all about the money!
Typically, an early stage startup can never come to campus as IIMs look for well-funded companies. The impending question is – are students opting for safer MNC jobs and ditching startups?
According to Professor Ganesh Prabhu, Chairperson, Career Development, IIMBangalore affected students are disillusioned. At the epicenter of the debate is Flipkart after it deferred the joining of IIM-A graduates that it hired as trainees. Some other startups followed suit, kicking up a storm.
Interestingly at IIM-B, rival Amazon is trying to lure affected students. "Amazon has been a major recruiter here (at IIM Bangalore). There are few students who have opted for Flipkart in the lateral placement process, which happened before the final placement. Students are looking at what other options they have," says Prabhu. He says that one of the students from IIM-Bangalore has opted to go back to his family business or
join Flipkart when the opportunity opens. Founded in 2007, InMobi also faced flak for deferring the joining of a few graduates. "There is a small portion, we have deferred them by few months. Delaying the campus hiring by a few months does not really affect how that individual will be treated post they get inducted into the company," says Arun Pattabhiraman, Vice President & Global Head of Marketing, InMobi.
Are placement cells not doing enough?
Gaurav Tandon, Co-founder, Yummade has been on both ends of the spectrum. He graduated in 2005 from IIT-Bombay and was the student placement coordinator at the time. He suggests correction within the placement cells.
"Placement cells in campuses are not very mature. The campus is basically trying to say – there was a problem externally created by these companies, we are basically telling you that you should look for safer jobs and get into industries which are much more stable. This is a very reactive kind of a measure," says Tandon.
There has been a lot of funding flow into some startups who have been able to raise a lot of capital. However, most of them have been unsuccessful in deploying it in the most efficient manner. Mindless, aggressive scaling has its repercussions.
Not willing to be named, an IIM graduate says that lots needs to be done in terms of career coaching. Sometimes, there is no one to educate us about the pros and cons of joining a start-up, aspects of high-growth environment, responsibilities, high-risk, high-reward scenario etc."
Elephant in the room
The big question remains – have start-ups lost to MNCs? Truth of the matter is that the market is fluid and needs time to recover.
Investors are getting cautious; they are getting into details of a start-up, from unit economics to strategic growth, et al. Following the uncertainty in the market, start-ups are now realizing the importance of knowledgeable investors. The next six months are crucial. It is time to give them room to breathe before writing their obituary. For now, the war between "safer MNC jobs' and "risky start-ups' is on.
This article first appeared in the Indian edition of Entrepreneur magazine (July 2016 Issue).