Around 70 percent startups have been impacted by the pandemic and 68 percent are cutting down their operational and administrative expenses, according to a survey by RazorpayX, the neo-banking arm of Razorpay.
The COVID-19 pandemic and ensuing lockdown impacted many businesses, with startups being the worst hit, but a survey has showed that only 59 percent startups paid out employee bonuses between April and November in order to conserve cash.
Around 70 percent startups were impacted by the pandemic and 68 percent are cutting down operational and administrative expenses, according to a survey by RazorpayX, the neo-banking arm of Razorpay. The survey further showed that startups are taking measures to conserve cash as they are expecting a decline in profits due to the pandemic, including deferring bonuses and additional benefits to employees.
So far in this financial year, only 59 percent startups paid out employee bonuses between April and November, it added. RazorpayX has analysed the data on transactions based on salaries and reimbursements made by startups on the RazorpayX Payroll platform (Opfin) between April and November 2020.
Out-of-office expenses decline The survey stated that as work from home has become the norm, employees’ out-of-office expenses significantly reduced in startups. Reimbursements saw a decline of 27 percent in the first three months (April-June) of the lockdown and saw a 55 percent spike between July and November, as companies started to provide reimbursements (furniture and broadband connectivity, among others) for a comfortable remote working set-up, it added.
During the first few months of COVID-19 era, travel and hotel reimbursements declined by 90 percent and 74 percent, respectively, and food and fuel saw a decline of 83 percent and 60 percent, respectively, as startups were able to avoid expenses on travel, hospitality and in-house cafeteria facilities.
However, internet and telephone reimbursements have seen an increase in the past few months as startups continue to try and make remote working easier for employees by providing better internet connectivity and reimbursing telephone bills.
As companies try to ensure their survival by cutting costs, many startups resort to slashing salaries and laying off staff.
In April, 24 percent of the employees saw salary cuts, however, starting September, the impact of the pandemic has been easing out in parts and startups have been finding ways to revive their situation and improve cash flows.
In November, only 14 percent of employees were affected by salary cuts, the survey stated.
Hiring on the rise Similarly, on hiring, the survey showed that job seekers have been disproportionately affected as entry-level jobs declined by 30-40 percent in the first four months of the lockdown. However, starting August, there’s been a slow but steady growth of 5 percent in startups hiring for entry-level roles, it pointed out.
Hiring for senior roles remained unaffected; there was a 15 percent spike in hiring for senior roles between April and November, it added.
Contractual hiring has made a big comeback during COVID-19, the survey stated adding that startups are hiring professionals on a temporary or project basis to conserve cash and some may refrain from hiring full-time employees in the next 6-12 months. Demand for freelancers and contractors has increased by 114 percent from April to November, it said.
(PTI)
Source: Business World
