[AltoLXI]

YC has asked startup founders to plan for the worst.

[CliffHanger]

Guys, let all who got good hikes have some fun, let's not create anxieties for them.

Let me tell a top secret - like our Indian courts which are sitting on countless cases piled up over decades, there are countless companies sitting on software projects backlog of at least 15 years. IT hiring is not going to stop and salaries are not going to crash.

Everybody is aware Whirlwinds are common in startups. Let's not relate it to mainstream tech industry where startups are just a very small part, and make people feel miserable. Just a request!

Let's be happy salaries are increasing and people are happy, let's spread happiness.

[ralto]

Originally Posted by CliffHanger

Let's not relate it to mainstream tech industry where startups are just a very small part, and make people feel miserable. Just a request!

Let's be happy salaries are increasing and people are happy, let's spread happiness.

Correctly stated. Startups are definitely a small part so this should not affect too negatively on the service-based IT sector. However, startups were mostly responsible for driving the salaries initially and the service sector had to follow the suit to retain employees. Now, if the startups see a crash in funding/salaries then it will not create problems for those who have already received hikes but will stabilize the sudden surge that was evident. Really happy for those who were able to make the most out of the situation but I feel this was a bubble that will not go back to the original levels but will probably simmer down.

[hondatoyotafan]

Originally Posted by raksrules

I agree 100% with this. I have stayed in US for 5.5 Years. My company (one of the WITCH) didn't file my green card. There is no black and white rule. They will do for some folks but always keep giving excuses like "slot nahi hai iss quarter mein". They will never initiate someone's GC in initial 4 Years of their H1B tenure. And then when time is right (as per company), things may get stalled.

I still do not understand why people in H1B stay through their tenure in the US in WITCH companies when the hiring market is so big. In addition to no GC filing the salaries of people posted onsite is also very low

[anand_roy]

Originally Posted by CliffHanger

Guys, let all who got good hikes have some fun, let's not create anxieties for them.

Let me tell a top secret - like our Indian courts which are sitting on countless cases piled up over decades, there are countless companies sitting on software projects backlog of at least 15 years. IT hiring is not going to stop and salaries are not going to crash.

Everybody is aware Whirlwinds are common in startups. Let's not relate it to mainstream tech industry where startups are just a very small part, and make people feel miserable. Just a request!

+1 to this. This period of the last few months has set a new baseline in salaries - even for the service companies.

On a related note, over the last few weeks, we have observed that hiring has stabilized and last minute rejection of offers has declined to a large extent. The joining ratio has improved considerably.

The flow of projects have not reduced and I feel that services companies will continue to do well. It is the startups that may suffer and a path to profitability will be a key ask of the investors going forward.

[SnS_12]

Originally Posted by CliffHanger

Guys, let all who got good hikes have some fun, let's not create anxieties for them.

But being in sync with market reality is something one should always exercise.

Our company had put in place a financial research team and some of the top guys were paid an annual salary in the range of 80 to 90 lacs and this was back in 2008. Most of these guys were living a lavish life based on their pay and had bought expensive homes and cars which they could easily pay for then. And then the 2008 September market crash happened and the whole team was fired. The kind of pay these guys were drawing would have been difficult to match even before the market crash and getting a job itself post the crash for them was a real challenge. Their financial situation was so dire that the company agreed to pay them an additional three months salary to help them sail through.

This was the first time that we saw people been asked to leave at such a scale as our company normally goes to great extent to retain employees so clearly they didn't see any value being added by the reports generated by these guys and with the kind of pay they were drawing for the kind of work they were doing I guess they never expected the music to ever stop.

[m8002?]

This is unwinding real fast. Have companies started to rescinding offers as well? That would be a double whammy for folks on notice period.

[poloman]

Originally Posted by CliffHanger

Guys, let all who got good hikes have some fun, let's not create anxieties for them.


Let's be happy salaries are increasing and people are happy, let's spread happiness.

I initially thought that the post was made in a sarcastic tone. Do you want to hear happy news only? IT industry is notorious for the insecurity and extremely fast ups and downs. We can close our eyes and pretend everything is fine. This is not to scare anyone but to keep the high flying grounded to realities and expect the unexpected.

Five years back I was working in a top US based semiconductor company. My manager was a high visibility person( or we thought so, not sure). There was a manger conference in US. He attended the same, came back and was ecstatic about his impending promotion as a director. The very next month, the entire team was closed and he was fired. We were leading an extremely cushy life and were brought down crashing to earth in a matter of days. It can be one of the worst phases in your life.

So ignore the warning signs at your own peril.

[JoshMachine]

Originally Posted by m8002?

Have companies started to rescinding offers as well? That would be a double whammy for folks on notice period.

The IT industry's "hiring > offer shopping > attrition" phenomenon is still in its bubble phase. And this bubble may well continue/expand till the end of FY22.

Unless it bursts, the mainstream IT companies (who are hiring for mainstream roles) have no choice but to continue to roll out offers.

[jetsetgo08]

Originally Posted by poloman

Many IT guys who got astronomical packages will soon feel the pinch, unless some sort of recovery happens. Rationalization will hit such people the first.

Unfortunately, rationalization usually hits the entire team.

[84.monsoon]

I think this will mainly affect start-ups, the industry bellweathers will do well as there is just too much digitization related demand out there and the average Joe in IT will continue to be much sought after. We may see job families like Data &AI, Product Management and eCommerce take a knock while Infrastructure and Cyber Engineering, Software Engineering, Testing and Support continue to do well.

[RijuC]

The Power sector of India suddenly has become redundant, and almost all private entities are either closing down or shrinking to a nameshake. Even there won't be any further growth or expansion in State owned companies. Hence a large pool of qualified and experienced power sector engineers have become jobless.

[sea_eagle]

Companies which raised funds at astronomical valuation without acknowledging fundamentals such as EBITDA & FCFs are the one's feeling the brunt of the storm. These are companies which valued growth-at-any-cost & vanity metrics over profits and free cashflows.

Mindless valuation metrics: I was told by someone in the funding community in the silicon valley that there were companies raising money at 60-80 times their SaaS ARR. Now one may wonder what's ARR - It's annual recurring revenue of a Company. Say suppose you have 5 customers who have signed-up for your SaaS product by paying $ 1000 a month. That's $5k in revenue but $60K in ARR. i.e. $5k per month multiplied by 12 months. Here's where things start entering 'smoked-up' territory - its valuation could be anywhere north of $4.2 Million (ARR * 70x) due to the sheer multiples that these SaaS companies were commanding. Imagine, just by signing a contract worth $5K in one month, you could be valued at $4.2 million. This is how SaaS multiples work. Now imagine, the kind of money that was paid for buying into the shares of these company - It's like paying 50L for a Maruti Celerio in BHPian language. When this takes place across the funding ecosystem, you know that the process is broken and a bubble is being created.

The VC Sharks: This monstrosity was a creation of the so-called venture capitalists who raise capital from wealthy HNI's & trusts with promises of returns north of 300%. IN the process they experience FOMO when they see one of their peers deploying capital at a 'futuristic' company working on some faint AI & data-driven technology which, they believe, will be the next Meta or Amazon. All fundamentals get discounted. Because they have to 'invest' at any cost.

Free & easy money won't do good, for long: During the pandemic, the sheer volume of doles given out by the US government to its citizens including corporate America was astronomical. Some estimates say it's double the official record of $3 trillion which means that fiat currencies to the tune of $ 6 trillion were printed and pumped into the system for free/ In the form of home loans, social security payments, corporate stimulus etc., This easy money got invested in the stock markets and helped some people create wealth. Now when the Fed tightened its balance sheet by increasing the interest rates, all hell broke loose. Because there's no money to pay the interest. People started withdrawing their funds from the markets which resulted in the US equity markets falling. Large fund houses which had invested in equity markets also started withdrawing their investments out of fear. This created panic-selling across the world and the tech stocks took a severe beating because they were the one's who benefited from the tail-winds of the pandemic.

The froth has to go: Nobody likes froth. It has to go. Sooner or later. This shake-up in the tech sector has cleaned-up the froth in the ecosystem and what will survive now are real gems - As some one said, every downturn has created the next generation businesses. These are exciting times to be part of !

Stay healthy.

[Mustang Sammy]

Originally Posted by m8002?

I was discussing with a friend who is a CxO in a US startup last week. The VC funding has fully dried up and investors have suddenly started asking for revenue model.

During each boom they say it is different this time, but the bust is always the same.

[Arun Varma]

Originally Posted by poloman

I initially thought that the post was made in a sarcastic tone. Do you want to hear happy news only? IT industry is notorious for the insecurity and extremely fast ups and downs. We can close our eyes and pretend everything is fine. This is not to scare anyone but to keep the high flying grounded to realities and expect the unexpected.

Five years back I was working in a top US based semiconductor company. My manager was a high visibility person( or we thought so, not sure). There was a manger conference in US. He attended the same, came back and was ecstatic about his impending promotion as a director. The very next month, the entire team was closed and he was fired. We were leading an extremely cushy life and were brought down crashing to earth in a matter of days. It can be one of the worst phases in your life.

So ignore the warning signs at your own peril.

100% agree. This is not about creating artificial anxieties but to be realistic. Most of the folks who were happy about getting 100% or more increases in offers and jump jobs indiscriminately fail to realise that the salaries are always proportionate with what the company makes - cost as a % of revenue. This may vary depending on the skill and the niche but this is a thumb role. If, for a given skill you are getting x, for the same skill if another company is offering you 3x, then you must be very wary. This is excluding those who have genuinely unskilled and thereon upsold themselves but to have the same capabilities and be lured by 5x thinking this is your true valuation is a cardinal mistake. No market in any industry will correct to that level. The basics of financial accounting will hold true and it is only a matter of time before correction happens.

When the pressures ease off, most big tech companies will hire and train freshers and let go off people whom they have hired paying exorbitant salaries for skills not in line with the money. It may seem heartless for those impacted, but it is simple organisational finance and it is the nature of the game we choose to play. The sooner every salaried job holder understands this, the better we can set expectations for ourselves and others.

The other problem now is we may have a bunch of people who may be unemployable because they have been paid way higher than their worth. Those folks' lifestyle would have been upgraded in accordance with their new reality. If, in the event, they lose their jobs, they will wait in vain to get another at their new salary which is unlikely. This, is bound to cause a massive wave of disgruntlement.

Bottom line, it will get better but it is going to get much worse before it does. Better to be pragmatic and brace for the impact.