Average ecomm salary hikes set to go down in 2019

The gradual maturing of the ecommerce and startup ecosystem, lower attrition and a decline in overall salary increase budgets are likely to pull down average salary increments at such companies in the country this appraisal cycle, top consulting firms say.

Compensation experts Aon, Willis Towers Watson and Mercer estimate average hikes at India’s ecommerce and startup companies in 2019 to be between 9.5 and 11.5%, a significant step down from the sector’s heydays. There is a silver lining though: companies will continue to reward high performers, rainmakers, and critical technology and product talent disproportionately as they use their salary budgets differently to retain talent in specific skill areas such as digital, analytics, big data and cloud computing.

Some companies such as Cashkaro said they are willing to give hikes of even 100% to exceptional performers while others will reward them with employee stock options (ESOPs), bonuses, and rapid career advancement.

“This is the natural course of maturity /stability for any industry,” Anandorup Ghose, emerging markets head at Aon, said. “There is initially a lot of growth in business and in pay, etc., fuelled by investor money and so on, and then the focus gradually shifts towards returns and profitability. Companies reflect that in managing compensation costs as well. Ecommerce is going through the same cycle.” However, top performers will get much better hikes. “Differentiation between an average performer and a top performer continues to be around 2.2X which is the highest in India,” Ghose said.

Aon expects average pay hike in the ecommerce and startup industry to be 9.5% in 2009, down from 9.8% last year, while high fliers can expect more than 20% hikes. Wills Towers Watson said year-onyear increases have seen a southward trend from a high of about 15% in 2014-15 and 2015-16 to about 10-11% now. At the same time, employers are setting aside 35-40% of their budgets for top performers, said Arvind Usretay, director, rewards, at Willis Towers Watson India.

“Ecommerce players are fine-tuning the salary increment budgets to balance the increasing demand to hire, manage and retain hot skills from the market, where increases may range up to 20% for top performers,” Usretay said. Experts attribute the slide in average increments to maturing of ecommerce businesses that has helped stabilise attrition. Further consolidation is expected in the market, leading to a more stable environment in salary increments, they said. With each round of VC funds getting more difficult to secure, and companies under pressure to ensure ‘sustainable growth’, increments are showing a more stabilised level, said Mansee Singhal, senior principal — rewards, and consulting leader for high-tech, mobility, at Mercer.

However, the multiplier of average to top performer could be up to 1.8x of average increment, she said. While several companies, including Flipkart, OLX, Droom and Urban Ladder, did not share information, others said key employees would continue to be rewarded handsomely, especially given the scarcity of top talent and niche skills.

At India’s largest cashback and coupons site, Cashkaro, individuals who have outperformed their peers may receive hikes of up to 100%, especially if they are in the initial stages of their career, its cofounder and CEO Swati Bhargava said. Then there are ESOPs and high-performance bonuses as well to those driving growth, she said. Paisabazaar.com and Bankbazaar. com said they are still in the process of finalising increments. “I believe this year will be similar to last year,” said Sriram V, chief HR officer at Bankbazaar.com. “But the difference will be sharper between high performance and others. Also, niche skills will be distinguished separately.”

Naveen Kukreja, CEO at Paisabazaar. com, said that the company would give out stock options to top talent and critical talent like it did last year. “We would look at giving out ESOPs to tech talent, talent in AI and ML at senior levels, mostly senior VPs and above,” he said. Online grocer BigBasket said it has a philosophy of recruiting people who can punch above their weight in every function. “On an average, both last and this year, those that met expectations got, or would get to see, anywhere between 8% to 10% increase,” said Tanuja Tewari, general manager-HR at BigBasket. “The increase for top performers would be competitive as per Industry standards. There would be some exceptional individuals who delivered outstanding performance despite being relatively undersized for a role who would receive a much higher increase.”