Just the other day I was reminiscing how, being a ‘70s child, I have seen some massive changes. There was a time you had to book a landline phone and wait for it to get installed, today you can simply order a phone online or walk into a store. Physical files became digital with the computer and changed from floppy to CDs to pen-drives and now cloud. The list is endless. That got me thinking and I realised that in my professional journey of 25 + years, I have been fortunate to experience and be a part of two big technology waves. One that began in the year 2000 with the Internet, leading to the services boom when IT services companies like Infosys and TCS became game changers. Today, 20 years later, we stand on the brink of another wave. With the rise and success of start-ups we are entering the phase of productization. The next few years will really define business models, marketing techniques, skills, jobs… everything!
We have the story of productization unravelling before us. From IT services, the emphasis has shifted to product and Software-as-a-Service (SaaS) industry. Given the prospering start-up scenario in India, the entire ecosystem of industry is changing. Today India has the 3rd largest start-up ecosystem in the world valued at USD 315 bn as per a report by 3one4 Capital. The best part is that for the first time it is not a cost arbitrage story, but the story of innovation, where products will fetch global price – eventually creating wealth for this generation.
The current trend shows that companies are reaching the billion-dollar valuation at a fast pace. Naukri.com and MakeMyTrip took over 20 years to achieve unicorn status. However, companies like Zomato, Flipkart and Policy Bazaar took close to 8 plus years, Nykaa and Oyo grew faster taking 5.8 years and Udaan and Ola Electric managed to turn unicorns in just 3 years.
In fact, India overtook China for the first time since 2013 in venture capitalist funding, according to a Bloomberg report. Indian start ups raised $8 billion in July, while funding to Chinese firms dropped to $5 billion. Venture capitalists and private equity investors are allocating more funds to India as China steps up regulatory clampdown on tech companies. While increase in investment has given an impetus to start-ups in India, the changing ecosystem in which they operate has played a key role in enabling growth and shaping the future.
The Digital Impetus
The pandemic posed many challenges but also taught us to look at things differently. The pandemic and the lockdowns allowed businesses and life in general to make full use of the power of digital. The combination of entrepreneurial momentum and digital facilitation has bridged distances and transformed mindsets. With no geographical constraint, it has become possible to work from anywhere, connect with people from across the world in a jiffy, broker deals through video conferences and made talent availability no longer limited to a region. It is in this scenario that Indian start-ups are easily able to compete globally from a base anywhere in India. Start-ups are no longer just confined to economic hubs like Bengaluru, Mumbai or New Delhi, but are now spread across the country.
This impetus of becoming digitally native with ease comes from a high growth trajectory of Internet in India. The cost of data in our country is among the lowest in the world, there is a rapid increase in wireless broadband subscribers and subsequently increased data usage. Entrepreneurs have used this newfound digital connectivity as an anchor for profitable commerce. Digital India has truly helped democratise India’s growth benefits. I think it is safe to say that the story of the rise of Indian start-ups represents social and economic transformations happening in the country.
What is remarkable is the pace at which this is unfolding. It took over 26 months for India to reach the first 10,000 start-ups and the last 10,000 start-ups have come up in just six months! Young entrepreneurs are creating solutions that serve the needs of the domestic market as well as cater to the global population. A large portion of the business is being consumed in the US, making it a real Make in India story. As per the 3one4 Capital report, the top 10 most valuable Unicorns in the country are worth USD 100 bn and by 2025 there are likely to be over 150 unicorns in India.
The Talent Market
An interesting fall out of this start-up boom is the impact on hiring and the talent market. The companies that graduated to being Unicorns in 2020 are looking to ramp up hiring across teams in 2021, be it product, tech, engineering, sales, operations, or data sciences. Start-ups such as Pine Labs, Zenoti, Postman, Razorpay, Cars24 and Glance are scaling up teams by 10% to 100% to drive market expansion and invest in product development. In fact salaries at these start-ups range between Rs 15 lakh to Rs 60 lakh per annum according to the Economic Times.
Meanwhile, India is all set to unlock a $1 trillion opportunity for SaaS companies that would create nearly half a million new jobs by 2030, as predicted by a SaaSBOOMi report. The $2.6 billion SaaS industry, which employs about 40,000 people, is likely to grow 20X in revenue by 2030. So the potential and opportunities that will arise out of it will also be mammoth! Imagine this, the demand for talent in the SaaS industry alone, will go from 40,000 to 5,00,000!
However, there is a gap in the demand and the available talent since employment opportunities of a different kind are emerging. As automation and AI technology gain prominence, some jobs have been directly impacted since they are now being done by machines. Adversely, the demand for new specialized skills is increasing.
This is a precarious situation where companies are grappling with talent shortage and rising attrition rates. On the other hand, there is a workforce that is seeking employment but their skills are not as sought after anymore. Add to that the effect of the pandemic. Companies are now taking a hard look at their business models and realising the need to re-imagine and re-invent. With remote working and other virtual tools becoming the norm, the job market has diversified, and location does not matter anymore. Talent can now be picked up from any part of the country. In this scenario, re-skilling has become crucial across levels.
Upgrade and Upskill
Companies are now looking for employees who can multi-task and have a specific set of capabilities. They want to hire top talent that is well versed in digital capabilities, as technology transformation holds the key to the future of business. Skills are now ever changing and gone are days of stereotypes or straight-jacketed roles. The need of the hour is to up-skill and cross-skill fast given the vast demand and dearth of talent.
Start-ups today have the opportunity and funds to spend on hiring quality talent and are particular about the specific skills they need. As new systems drive a greater level of engagement with employees across borders, start-ups will be able to plan hiring to capture the best talent, sans boundaries, maybe even out of India. Companies that were rigid about their manner of working are now more flexible with the adoption of tech-savvy tools as it looks like work from home/anywhere is here to stay.
Given this scenario, it is clear that the skill set of the future will be driven by displacement caused by technology and automation and will be very different from what was in vogue 5 years ago. Since this is the start of the prodcutization wave, some of the key skills with big demand will be: Product management, Product engineering, Product Design and Product Operations. The key tech skills that will be in demand five years from now will be those that require artificial intelligence and machine learning, data analysis, cloud computing, DevOps engineering, robotic process automation, cyber security, and UI/UX and mobile app development.
However, automation will have lesser effect on jobs that require applying expertise. Therefore, these cross-functional skills will be in top demand due to their humane advantages. So skills like managing people, complex problem solving, emotional learning and leadership and social influence will continue to hold prominence.
As we look ahead, the start-up culture holds great promise for India – be it the economy, the talent market or even the Indian society. A remarkable aspect that must be mentioned is that many start-ups, about 45%, are run by female leaders. These start-ups are championing gender equality and workforce diversity by leveraging technology to capture previously untouched sectors such as fashion, beauty, animation and inventory management.
To summarise, with more money to invest and digital giving the ease of remote work, the future is bright. However, technology is rapidly providing new tools and augmenting human capacity and capabilities. While technology is a disruptor, it is also an enabler. It is not just making many jobs obsolete, but also creating new jobs that need new mindsets, skills, and tools. Remember a time when there were primarily two career options – to become doctor or an engineer, and for some a third choice of becoming an accountant? That is long gone. The landscape has completely changed and the ability to learn and change faster than your competition is the only way. India is set to become more competitive globally and it will be exciting to see how this journey to a new India unravels.