Friday, April 8, 2011

Why startups in India find it hard to hire devs

Mayank Sharma wrote an interesting blog post about hiring difficulties for startups in India. He says the reasons are

(1) The very good devs can work for multinationals (Google,Microsoft etc) and local startups can't match the compensation.

(2) Indian services companies have lock in contracts

(3) No real history of non founders making lots of money from a startup

(4) Those who do want to work for startups have "unreasonable expectations" (quotes mine, not his)

Manoj Govindan (who works for (startup) Perfios - due disclosure - I reccomended him to Perfios - guilty as charged! :-) ) responded with four reasons why these startups don't hold any allure for good devs

(1) very few Indian startups offer significant equity to early hires.

(2) Many Indian startups give employees little say in strategic decision making. In the end, you are still a "coding body".

(3) Signal/Noise ratio - too many "social this" "cloud that" clone startups out there than innovative ones. Noise attracts noise.

(4) "Very good guys" like to make own technical decisions. Here they find them already made and locked in before they join. Often tech stacks are in place even before people actually decide what to do.

I have some sympathy for both view points. Is the question such a complicated one though?

There is a simpler explanation. All the points above can be subsumed under "Whenever there is a demand and supply gap, and some kind of free market mediating the two, prices rise". That is it.

Good devs, those with the combination of tech chops, communication skills, attitude and *ambition* (iow the exact type you want for your startup) are a scarce resource generally and particularly so in today's market. Demand is very high (this fluctuates) and supply is very low (this is constant). In such a scenario, the price varies from very high to high. Right now it is very high. And that is it.

You just can't buy gold for peanuts (speaking metaphorically. In reality you can trade a few truckloads for some gold). I can't. You can't. It is a value neutral statement - just the way the market works. You can sometimes marginally route around the Iron Law of supply and demand - Zoho trains people who wouldn't be considered for normal dev jobs for e.g - in effect, creating their own supply - but you can't escape it.

Even then, the argument goes, the "price" for good devs isn't necessarily all about money. True enough.

Look at how Silicon Valley's startups (or even more narrowly, YC funded companies) hire good devs - If you can't match (or exceed) market price in terms of compensation you need to make it up with (a) significant equity and/or (b) advanced tech and/or (c) a compelling business model with some traction and/or (d) a "change the world" product (think SpaceX) or (e) credible, proven founders. This is true *everywhere*, not just in the valley, though details and leeway differ. If you are a company trying to hire the very best developers, you have to pay the price somehow.

The typical Indian "lean startup" fails on all counts - it is often doing some whacky buzzword heavy, content lite, mobile/social mini app, works on PHP and MySQL, has no money (and so offers bare minimum salaries), is often run by clueless MBA/undistinguished engineer types and will give a prospective employee 1% equity in a doomed product for an endless 18 hour working day.

Why the hell would anyone half way technically good want to work with such outfits?
Devs are sometimes economically stupid but they aren't *that* stupid.

If they want to do interesting tech stuff they can go work for Google (Mountain View, not Bangalore!), start their own "great tech" companies, work on Open Source projects, work from home for US based startups doing interesting things or wait for Indian startups with cutting edge tech to proliferate, meanwhile drawing a steady salary and honing their skills.

If you must stay in Bangalore, but want great tech and a small company, go work for Gluster. All the tech and Open Source you want. Or apply to Tachyon. Or Notion Ink. There are a *lot* of companies attempting technically interesting things in Bangalore these days. And there is space for many many more, if you have founder dreams.

If you want to do services web dev, and work with small teams of bright people in a great office atmosphere, they should go work for someone like C42. Good company I vouch for.

If you just want to get out of that crappy enterprise services bodyshop, but don't want to get stressed about whether your children will starve, *and* want to do something "like a startup, but stable",go work for (a) someone with traction and funding, but aren't quite a startup any more (say SlideShare or Inmobi or Flipkart) (b) work with one of the many offshore centres of product companies, who have plenty of money. (say Intuit,or Zynga).

If you choose to be an employee (and it is an honourable choice), always make sure you are getting what you are worth - be that in terms of money, equity or technical challenge or whatever your individual preference is. This is just plain common sense.

If you want to be entrepreneurial and don't mind the stress, be a (co)founder, not an employee. That way you can still work on the latest social/mobile ripoff idea in PHP (or the blue sky idea in your own custom language!) and scrounge around for money, but you'll be in control of your destiny and won't have to factor in crazy bosses. ;-)

Nutshell : The law of demand and supply explains all phenomena in a free market. If you are any good at programming, you have more options now than you ever did. If you want to hire such people, create a compelling value proposition. If you aren't getting enough applications from qualified devs your "offer" isn't good enough.

The End.

EDIT: someone asked about good startups in Pune. The only Pune based startup I know of is Infinitely Beta (who have no problems recruiting afaik). But I am no expert on Indian startups.Do your research!

EDIT 2: I dashed this off while waiting for a build to complete. Apologies in advance for any typos/flaws.


Manne Rajesh said...

Nice to read one good article that has summed-up all the points that one can think of. I appreciate it for bringing in lots of facts with a great insight.

My Take on this, not very different from yours but would like to write,
1) Devs are hard to find because there are very few that are being made(Supply-Demand). Most of the best devs that I came across are self-made. So hardwork pays off later but not immediate.

2) Service companies don't have much of an innovation in terms of product development. Those who got locked in will soon end-up rotten. They become weak and lose vigor. So make good choices in your career. Or else you end up making bad choices and finally only regret is left as a residue in your mind.

3)Ecosystem plays an important role in nurturing startups. For example I find "ET The Power of Ideas" to be totally laughable.Also i have no idea what's the present condition of "TATA NEN Hottest Startups". So VC's and other organisations should comeup with better ideas.

4)I haven't seen one "serial entrepreneur" who had started & got successful with multiple start-ups one after another. I don't know the whereabouts of the founder. Also

Rajesh Manne
//Would like to write many points. But me too have no time right now. :(

Ram said...

4 - Bazee founder is a VC at Nexus
Burrp founder Deap has started another company

Anonymous said...

A few nits.

Some of the companies you have mentioned here were started by people with deep pockets and deep networks like Perfios and Infintely Beta. Not really the struggling garage types - not that its important per se, but it's important to know. The InMobi folks are well funded to the point that they cannot be considered a startup. As for Tachyon, the founders have parted and their transliteration (or whatever) product has been sold. They are now reportedly into joint product development or develop software for other companies for payment++ .

Ravi said...

@anonymous thanks for the data (I don't keep up to date on these things, so updatesappreciated) Good nit picking, but the larger point is still unaffected though.

Deep pockets are *good* news for an employee. Deep networks are even better. And companies don't become "non startups" just because they have or acquire money or networks.

Besides, I specifically said in the article that if you need some guarantee of steady money you should join companies which are smaller, newer and nimbler than the average services behemoth but still have money (or as you put it "deep pockets") and are prbeyond the "garage" stage. And if you join a "garage" stage startup for less than market rates take a good look at how much equity you get.

As always readers of this (or any other) blog should do their own research. (and commenters with good comments shouldn't be anonymous ;-) ).

Harish Mallipeddi said...

Well written.

I've said more or less the same things when Swaroop was collecting feedback on the same question -

Anonymous said...

anon here again:
My point is that once people are well funded, they are going to start acting like big companies again.Mainly work keeps getting split to the point where the mgmt feels comfortable that there are no dependencies and there are no superstars. Second, once they get more funding they are gonna bring in more managers, make no mistake - and where were those managers previously ? service companies -simple math. If good managers are hard to find, good product managers are an order-to-two harder to find. And remember the great VCs here in India are mostly from service backgrounds - very few of them have real product experience. You can't take funding and not lose control. OK there are A-list VC funded companies in India - tell me about a few of them, honestly ... They have received more funds than YC's $17000 + $150000 (of late) ...

Ravi said...

@anonymous I tire of this hair splitting. Besides extended conversations with people who choose to be anonymous are drags and boring.

All of your suppositions and imaginings of the failings of managers and so on have nothing to do with my central points in this entry - which have to do with the law of demand and supply as they apply to hiring developers for startups.

You are reacting to things in your head and complaints against specific companies than to anything *I* said. If you have hangups about the imperfections of varous Indian companies, you'll have to work them out elsewhere.

So, adios and au revoir.

Deepak Honnalli said...

Well written, I should say. For people who are considering some work on C/Unix Kernel modules, work outside is pretty scarce, or I probably do not know where to look.

Amey said...

I feel a lot of Indian start-ups don't have their own identity and are trying to be like the big-wigs in US. Sometimes you need to realise if you pay more and get a good developer, not a rockstar mind you, the more probability of you getting things right. Lot of start-ups are looking for success, short term and hence target aptitude and not attitude. If a lot of companies bothered about telling their stories instead of their rockstar and ninja, more and more people like me would be willing to take that pay cut and believe in you. Don't smooth talk, talk sense.

cies said...

while i work for an indian startup,, but usually live in the Netherlands. i think one important reason it is so hard to hire good devs in india is because parents (fathers) quite often make education choices for their children. because of this the percentage of devs with no real passion for IT is quite high compared to the NL or the US.

my Rs.2 :)

btw.. if you are truly passionate about IT, have some experience (preferably with linux/ruby/rails) then you should consider getting in contact with us.. we're a wonderful team disrupting the market for mico-credit administration software with our open source (!) offering.

Ankur said...

having worked at two startups - vegayan systems and thinklabs [seedfund funded] and now at HP ... I understand how things work at both side of the fence. What you have written here is true. Would like to add that Startups are unable to match salaries and benefits for employees of 4-7 years work experience with those offered by well established companies. Also sadly society at large looks down upon one who work in small unknown companies.
I work at HP now and everyone thinks I am doing a great job working on difficult problems and my work is impact millions of life. Let use leave the truth aside ... Does people's perception matter ... yes it does and most that i know of don't think much of small companies aka startups

Gautam said...

Good article. I wish I could work for any of the startups.

RK said...

I work for Flipkart. We are hiring and we have competitive compensation as well good stock option plan.
Check us out

basant rajan said...

- agree in principle on the laws of demand & supply determining cost of labour.

have been on both sides of the fence and feel that ...

- the premium an indian professional places on 'job security' is rather high and this queers the pitch, more than just a little, against a start-up.
- by the time, the typical indian developer has developed an appetite and/or a tolerance for some risk, few manage to hold on to the passion for actually coding - their aspirations have long since been run down by our 'industry expectations' to being managers.
- larger companies seem to have worked around the acute dearth of 'skilled' manpower by substituting pre-employment education with post-hire training, which is unviable for the smaller players.
- the relatively significant contribution one can make at a start-up vs. being a small unseen cog in a large MNC is often steeply discounted by many of the younger professionals.

- price is not really what gets in the way of our hiring (sol/hpux/linux kernel & python); coming across 'programmers' or worse still, 'coders', as opposed to 'engineers', is.

Quakeboy said...

nice article.. gave me some clarity on the decisions I have to make being a 5yr exp Dev now.

Its sad and unfair I feel when you work your ass off putting 12-18 hours for a start up and still treated as a coding factory. Thanks for sympathizing with the sentiments.

Anonymous said...

For Tachyon Technologies :They still hold the rights over their product Quillpad.

They are licensing this technology to companies but they haven't sold it.

micky said...

Love your post. As someone itching to start something on their own, this resonates a lot with me.
PS: Anyone can make a typo so don't feel obliged to add "I dashed this off while waiting for a build to complete. Apologies in advance for any typos/flaws.", when you totally didn't. This is a well thought out and structured post. Cheers!