Flipkart Effect: Management, tech grads may prefer joining safer companies

Darling of jobseekers till recently, the startup space may lose some sheen in the job market as management and tech graduates might prefer joining 'safer companies' after the Flipkart fiasco, say experts.

The e-commerce major has deferred joining dates for campus hires from IIM Ahmedabad (IIM-A) and IITs citing restructuring of its businesses, for which it has got a lot of flak from the colleges as well as the industry.

Reports suggest Flipkart is not the only company from e-commerce and related sectors to have deferred the joining dates for their campus hires and there are many others including InMobi, CarDekho and Hopscotch.

According to industry and HR experts, it might also bring a lot of pressure on reputation, success and unpredictability of the educational institutions concerned as it disturbs their placement track record.

"Startups would definitely lose sheen because of this 'fiasco'," staffing services firm TeamLease Services Assistant Vice President Sudeep Sen said.

The job seekers might begin thinking that it is good to earn a little less and join an established organisation, rather than a startup, he added.

The startups are, however, confident of passing through this turbulent phase and get back their attractiveness.

"Of course, it will have some adverse impact on startup attractiveness. However, each industry goes through it -- a period of euphoria followed by calmness and then stability sets in. The startups will become attractive again once they become more stable," e-commerce firm Zopper CEO and Co-Founder Neeraj Jain said.

Few years back, not many people were interested in working for startups because everyone associated some high risk with startups. This changed in last few years, but again startups will not be preferred by new people entering the job market, Jain added.

Flipkart, which has been the poster child of Indian e-commerce industry, has also seen markdowns in the value of its shares by a number of investors like Fidelity Investments and T Rowe Price and Morgan Stanley.

The overall early-stage private equity (PE) investments have also seen a sharp decline in the first four months of this year. According to PwC, early-stage PE investments saw a decline of 57% in value terms and 25% in volume terms during January-April 2016.

According to Wealthy.In Founder Aditya Agarwal, the delay in hiring plans of companies like Flipkart is a direct response to the prevailing environment.

"World over, technology stocks have taken a beating in last one year and Indian companies are no different. The exuberance of the past is also hurting some of these companies and a sudden shift to focus on efficiency rather than growth has hurt their recruitment drive," Agarwal said.

This whole episode, however, has a blessing in disguise for startups that are doing well. They will have more talent to choose from and at lower costs, some experts opined.