2022 is already showing signs of recovery for the industry but why are startups slowing down on hiring?
Many have made predictions about the industry recovering from the losses in the past 2 years in 2022. But against these predictions, Startups have boosting layoff rates. In fact, they are also lowering their hiring rates. Why might one ask? Following are the reasons:
– Low Profitability
While many of the firms have been able to generate revenue, they are yet to achieve profitability. Investors have put a lot of pressure on these businesses to show that they are profitable. Companies have been cutting headcount to minimise costs in order to achieve this.
“This slowdown and bout of downsizing does not come as a surprise, since these startups, which were heavily funded, were hiring irrationally last year. This kind of rationalisation was expected from them. Their hiring intent is bound to slow down and remain so for a while.” said Chandel to HRKatha
– Pressure from Investors
Most startups rely on outside funding to build their businesses. The majority of their finances come from foreign investors. These investors are hit hard by the financial shortage and disruptions brought on by the Ukraine-Russia conflict.
– Slow Growth
This year, substantially backed startups were expected to develop at a significantly faster rate. However, they were unable to reach that expansion. This is one of the reasons for the startup ecosystem’s massive layoffs.
More layoffs are likely in the future, according to an HR professional who works closely with startups to help them expand. And that the recovery from this catastrophe will take around a year. He adds.
As we can see, Startups are slowing down on hiring while being quick at massive layoffs. The major reasons for this catastrophe are listed above. But besides that, one more reason is the inefficiency of the hiring system.
If a company hires unskilled employees it’ll have to spend more on training and this is not efficient for startups. A great solution to this is implementation of a Recruitment System. A Recruitment System provides you with many useful tools to boost recruitment efficiency. Applicant Tracking System (ATS), Resume Parser and Interview Tracking.
A dedicated Recruitment System though, on its own, can be expensive for a startup. Spine HR Suite comes with a Recruitment and Onboarding module. Being Modular makes Spine HR Suite much more affordable than other Recruitment Solutions. Spine HR Suite also offers other modules like Payroll, Attendance and Timesheet. This means as the organisation grows you can add modules and build a full-fledged HRMS. You can learn more about Spine HR Suite here.