Do students of India’s elite colleges want all the benefits of startups without taking any risks?

Playing safe?
Playing safe?
Image: AP Photo/Aijaz Rahi
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India’s elite engineering and management schools want to create a safety net for their students to hedge the risks of joining startups—which are, somewhat ironically, supposed to be all about taking risks.

Last week, the Indian Institute of Management, Ahmedabad (IIM-A), one of the country’s top-ranked business schools, sent out a strongly worded letter to Flipkart after the e-commerce major  decided to postpone the joining of campus recruits due to organisational restructuring. IIM-A said that its students felt “cheated” that Flipkart would onboard freshers in December, instead of June, and the compensation of Rs150,000 each that it offered was “utterly unacceptable.”

Other startups such as InMobi, HopScotch, RoadRunnr, Click Labs, and CarDekho, too, have deferred induction for up to six months.

The Indian Institutes of Technology (IITs), meanwhile, are so enraged they are considering a new set of guidelines where the institutes would examine startups before allowing them to recruit. Startups may be made to disclose their financial statements and source of funding if they wish to hire from IITs. And they may be allowed to visit campuses only after other large companies are through with recruitment.

“We want to send a strong message to recruiters that they should define their recruitment policy appropriately before they go to campuses,” Asha Kaul, chairperson of IIM-A’s placement committee, told The Times of India.

But such rules don’t entirely make sense.

“I run a startup today and I know that my balance sheet changes every few weeks. I am not sure if any technology or business school can make much about the future of my business even if I showed it to them. So such decisions really won’t make any sense,” said Loveleen Bhatia, co-founder and CEO of Bengaluru-based Edureka. Bhatia graduated from IIT-Varanasi in 2002.

The reaction from the IITs and IIMs are ironic because risk-taking is in the nature of startups.

“Startups are a risky affair, not just for freshers but for anyone working in the sector,” Bhatia said. After graduating from IIT-Varanasi, Bhatia got an offer to join US-based Lucent Technologies. His joining date was deferred by six months, during which time he took up a teaching gig with a coaching centre, which paid much less.

“You must have a risk appetite if you want to work with a startup. You could ensure that your joining date is not delayed, but then what if you get laid off tomorrow? And we have seen such things happening at startups,” he said.

Why startups?

The acceptance rate at the IITs is under 1%, while at some IIMs it is even lower at 0.25%, which means that students from these institutions often represent the creme de la creme of India’s high achievers. For years, they’ve been successfully courted by India’s biggest companies and large multinationals, until startups joined the recruitment queue more recently.

“Startups have been in the news and they have been flushed with money over the last few years. That is the reason why students get lured by startups,” said BS Murthy, CEO of HR consultancy firm, LeadershipCapital.

Flipkart, for instance, offered annual packages of over Rs23,00,000 ($34,098) to IIM grads last year, compared to the Rs16,00,000-20,00,000 offered by traditional industries such as banking and financial services, according to Murthy.

New graduates are also attracted to the more challenging roles startups offer. “At a startup, a fresher gets wider opportunities to grow and climb up the corporate ladder,” said Manjunath Talwar, founder and CEO of recruitment platform, Hiree. Talwar is also an alumni of IIM-Kozhikode.

“The kind of opportunity and growth you can get at a startup would take a much longer time to come at a large corporation,” he said.

Playing safe?

Two recent graduates of IIM-Bangalore said that they, and their peers who opted for startups, were particular about working for “the good ones.”

“Working with a company like Flipkart, Snapdeal or Ola gives you the opportunity to get a good exposure, but in a controlled environment. You can get interesting and challenging projects to work on in the first few years itself, which you would not at a bigger corporate. In addition, these companies pay competitive salaries,” a student who graduated from IIM-Bangalore this year said, requesting anonymity.

“Startup experience is very high in demand right now,” said Paras (name changed), a student at IIT-Bengaluru. Paras wants to work at a startup because he has heard from his seniors that it opens up “many more avenues.”

“Many of my seniors were poached by competitors in less than one year of their joining a startup,” he said. “They got good increments and better job titles.”

Sometimes, this attraction can eclipse the harsh realities of the startup ecosystem.

“When you are in college, there’s a herd mentality. So far most students have been blinded by the glamour of working with startups,” said Manjunath of Hiree, “and I don’t think anyone really thinks about the risks that come with it.”