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Indian startups are struggling for funds to continue doing business
AP PHOTO/ALTAF QADRI
Surviving the turmoil.
THE DISRUPTION

Salary cuts arrive at Indian startups amid the coronavirus slump

Sangeeta Tanwar
By Sangeeta Tanwar

I write about all things retail

India’s coronavirus lockdown is taking a toll on its startups.

Over 25% of these companies have already announced across-the-board pay-cuts, according to a recent survey of CEOs. Another 37% are “actively considering” such a step.

The survey was conducted by Praxis Global Alliance, a Gurugram-based management consulting and market research firm, in the last two weeks of March and included 50 Indian startup CEOs from across the country.

The senior leadership may have it worst.

The surveyed startups planned to trim salaries by between 5% and 50% for their management teams.

Yet, they were committed to avoiding layoffs. “Startups are looking to cut costs and salaries but avoiding layoffs because hiring good performers is a challenge. So, leaders are discussing restructuring pay with their employees rather than firing them outright,” said Madhur Singhal, managing director at Praxis Global Alliance Mumbai.

The future, however, looks uncertain.

Conserving cash

Over 37% of the companies had cash to run only up to 12 months.

Besides pay cuts, they are now looking at other means to reduce costs. New product launches and geographical expansion plans, among other things, have been put on hold.

Recovery

Around 40% of the entrepreneurs said raising funds will be key in the near future. However, they believe it will be a daunting task as the investment sentiment is likely to remain extremely weak over the next three months.

There’s still optimism, though.

At least half of the Indian startup CEOs are hopeful the country will move past the coronavirus threat in the next three months, and new business opportunities will start coming up from June.

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