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India’s most successful unicorns lack gender diversity at the top

Employees work on their laptops at the Start-up Village in Kinfra High Tech Park in Kochi
Reuters/Sivaram V
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Indian startups may have taken the country forward in terms of tech innovations, but when it comes to gender balance, they’re pretty much following the footsteps of legacy IT outsourcing firms.

India’s largest unicorn, Paytm, which filed its pre-IPO documents with the Securities and Exchange Board of India (SEBI) on July 16, has only one female director alongside seven men on its board. Zomato, the food delivery unicorn that went IPO last week, has four women on its board (pdf) who were appointed just three months ago, as the company was preparing for its public listing.

This skewed gender ratio is pretty much in line with India’s legacy outsourcing firms. The three largest IT services companies in India—Tata Consultancy Services (TCS), Infosys, and Wipro—have exactly the same dismal ratio of women to men in their boardrooms: 2 to 7.

The Companies Act of 2013 mandates publicly listed companies, as well as those with corporates with a turnover of over Rs300 crore ($40 million), appoint at least one woman director. While disappointing for a trend-setting unicorn, Paytm doing the bare minimum is unsurprising once you look at the broader ecosystem.

Gender diversity on India Inc’s boards

“Having gender diversity on our board was a baseline, not a north star. More than gender diversity, we wanted to achieve cognitive diversity on our board, and were able to achieve that with the amazing folks we have on our board now,” said Zomato co-founder Deepinder Goyal in a company blog post in April when the company inducted four women to its board. The women on the Gurugram-based company’s board come from diverse backgrounds: badminton player and ex-Olympian Aparna Popat, former CEO of e-retailer Zalora Gunjan Tilak Raj Soni, founder of air quality monitor manufacturer Airveda Namita Gupta, and Sutapa Banerjee, former head of private wealth business at ABN Amro Bank NV (India).

But Zomato’s recently-minted new board is an anomaly.

In 2017, the average female to male ratio across the boards of over 30 Indian startups was 1:7, an analysis by digital news agency The Ken found.

An overwhelming majority of Indian unicorns are founded by men. Of the companies hoping to IPO in the near future, FedEx-backed logistics firm Delhivery has only one woman on its board, and only three of PolicyBazaar‘s 10 board members are female. And Grofers appears to have none.

Meanwhile, just 55% of all Indian companies had female directors, and among those, two-thirds had just one, an analysis of 628 listed companies revealed.

Besides the boardrooms, Indian tech firms have had an acute shortage of women in decision-making roles. The top IT outsourcing firms have had male CEOs since decades. In July 2020, Roshni Nadar Malhotra became the first woman to lead a listed IT company in India when she took over as chairperson and CEO of HCL Tech. Nadar-Malhotra is the daughter of HCL Tech’s co-founder Shiv Nadar.

Diversity is a family business in India

When the rule to have at least one female director first kicked in, the $200 billion behemoth Reliance Industries, helmed by India’s richest man Mukesh Ambani, hired its first female director: Ambani’s wife, Nita.

And Reliance wasn’t alone in tapping into kin. The boards of Asian Paints, tobacco manufacturer Godfrey Phillips, clothing brand Raymond, JK Cement, Jet Airways—the list goes on—immediately inducted female family members to tick the box back then.

Such appointment of family members reeked of tokenism, experts say.

In 2018, SEBI tried to rectify that by asking firms to appoint an independent director. But the nuance of specifying education levels or work experience to hire someone was still lacking, meaning firms could hire just anybody for the sake of it.

“Indian patriarchal and family dominated system failed to imbibe these regulations in right perspective so much so as the male-dominated Indian boardrooms started appointing one woman merely for compliance, destroying the very purpose of legislation,” Gagandeep Singh, assistant professor of economics at DAV College in Amritsar, noted in his 2020 paper on corporate governance. “Later, it was observed that the process of compliance of women representation was merely an ‘eyewash’ to escape the strict punitive measures, and female directors hardly had a say in the board’s strategic decision-making process. Thus, their role was reduced to a dummy.”

In a few cases, rampant sexism has kept savvy women out of boardrooms. When 59-year-old New York-based scientist Valli Arunachalam, daughter of Murugappa group’s late executive chairman, was turned down from the 120-year-old business conglomerate’s board, she alleged that the male members of her family “cannot tolerate women in their boardrooms.” The company has one female board member.

Even now, the situation remains mostly dire. Arunachalam is still fighting for a seat in the “sons only” business. In the past seven years, the oils-to-telecom conglomerate Reliance has added just one more woman—State Bank of India’s former chair Arundhati Bhattacharyato its 13-person board, besides Nita.

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