Startups outsource more, hire less – report
BENGALURU, INDIA — A report from RazorpayX Payroll, Razorpay’s business banking platform, revealed that money paid to outsourcing companies grew 26.77% over nine months. Meanwhile, hiring of full-time employees dropped 17.23%.
The business banking platform analyzed the payroll data of over 30,000 employees across more than 20 sectors from April to December 2023. Their findings indicate startups now use specialized outsourcing firms rather than hire more in-house staff.
Demand for outsourcing increased the most in technology (14.14%), sales & marketing (10.74%), and logistics & operations (6.71%) departments. However, individual contractor salaries only rose 0.22%.
The total salary disbursed over the past nine months also grew by 8.22%, with the average salary for full-timers witnessing an uptick of 6.69%. Full-time female employee salaries surged by 9.13%, while male employees’ salaries rose by 8.87%.
The report stated that the positive trend in salaries for female employees “reflects a commendable increase, highlighting strides toward gender pay equity in the workplace.”
On the other hand, recruitment for senior and full-time employees saw major declines. Hiring for senior executives dipped by 37.63%, Chief Experience Officers (CXOs) by 25%, and full-time employees dipped by 17.23%.
Despite the overall hiring slide, some departments like sales, marketing, and finance saw full-time staffing increases.
“This strategic shift aims at enhancing efficiency, fostering a balanced approach to effective capital utilization, and paving the way for future building blocks of the company through innovation,” said RazorpayX Vice Presdient and General Manager Ayush Bansal.
“While challenges are apparent with the decline in CXO hiring, the industry’s commitment to fostering a workplace that values diversity is evident,” Bansal added.
The findings also indicate outsourcing is redefining traditional employment models as startups adapt to current challenges. Rather than expand full-time headcounts, they are relying more on external partners to scale capabilities as needed.
