Are Startups Losing Their Shine? 67% Employees Prefer Moving To Established Firms: Report

According to a study by CIEL HR Services, nearly 67 percent of employees in startups prefer transitioning to established firms due to job security, better pay, and financial stability.

The report highlights a significant attrition issue in the startup sector, with the average employee tenure being only 2-3 years.

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CIEL HR Services, a Chennai-based human resource solutions provider, found that job security is a major concern for startup employees, with 40 percent expressing “unease.”

Additionally, 30 percent of respondents cited better pay and the resulting financial stability as reasons for moving to established companies.

Furthermore, about 25 percent of candidates mentioned the lack of work-life balance in startups as a factor in their decision to join well-known firms.

Aditya Narayan Mishra, MD and CEO, CIEL HR Services, said, “Startups play a vital role as key catalysts for growth, fuelling innovation and generating employment in diverse sectors. With 65 per cent of companies planning to increase hiring in the coming months, the future looks promising for the startup ecosystem.”

Mishra however cautioned that startups need to prioritise employee retention and provide comprehensive value propositions that prioritise employee well-being, career advancement, and work-life balance.

“This will help employees regain their confidence in startups and reduce attrition,” he added.

The report is based on the data and analysis of 1,30,896 employees across 70 startups in the country.

Some of the other key findings include software development roles were the most in-demand, constituting 18 per cent of the job requirements in the startup sector, followed by sales, pre-sales, retail, and enterprise sales.

The report also indicated that there has been a strong demand for experienced professionals and opportunities for newcomers in the startup sector.

Startups with more employees and good HR practices are implementing various initiatives to overcome high attrition rates like offering attractive compensation packages, adopting remote-first policies, and providing robust employee stock option schemes, among others.