Payroll practices of start-ups have witnessed a significant change over the last two years. Over the past six months, salary spends by start-ups has increased significantly, indicating hikes, promotions and new hires, according to a latest Insights Note by RazorpayX Payroll, the business banking platform of Razorpay.

As per the report, the total salary spends by start-ups increased by 43 per cent between April and September 2021. The report is based on observations from the payroll data of over 25,000 employees across 360 start-ups in India from over 15 sectors who currently use RazorpayX Payroll.

“The pandemic caused many start-ups to freeze performance appraisals and increments. However, the scenario has reversed this year, indicating a gradual movement towards a business recovery,” the report said.

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Salary spends have increased significantly in sectors such as edtech, fintech, and electronics (online and offline) during the last six months. Moreover, some start-ups even increased the median salary of their employees by 7 per cent this year.

There has also been a 52 per cent increase in organisations that disbursed bonuses. The amount paid out on bonuses increased by 23 per cent during the past year as opposed to pay cuts and deferred bonuses last year.

“Real estate, hospitality and agritech are some of the sectors that weren’t able to give out bonuses yet since they are gradually stabilising,” the report further added. Employee headcount also grew by 30 per cent in the last six months. “As businesses start to flourish, hiring has kick-started again and is expected to only grow in the months to come,” the report said

At an individual organisational level, 57 per cent of the organisations saw an increase in hiring, and 28 per cent saw a decrease in headcount, in the last six months. “The e-commerce sector contributed to this growth in a major way, given that a lot of businesses and consumers started to embrace digital,” as per the report.

Employee headcount in entry-level roles grew by 14 per cent during this time period. Mid-level roles grew by 31 per cent while mid-senior level roles saw a growth of 38 per cent. Senior-level roles saw the highest growth of 43 per cent in headcount across start-up organisations.

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Reimbursements to employees also grew by 50 per cent in the last six months, compared to the previous six months. After a drop in the first couple of months, travel reimbursements increased by 54 per cent in the last one month as work-related travel across start-ups are starting to increase.

Fuel reimbursements increased by 28 per cent. Further, “reimbursements for internet connectivity have increased, possibly indicating continued remote and hybrid work regimes,” as per the report. The number of reimbursements paid in this category grew by 63 per cent during these six months. On the other hand, food reimbursements dropped by 75 per cent in the last six months, after a peak in March.

Shashank Kumar, CTO and Co-Founder, Razorpay said, “Businesses across industries are on the road to recovery and these insights reiterate this in many ways. The fact that the majority of our start-ups using RazorpayX Payroll have increased their salary spends alongside a steadily growing headcount is a clear sign of revival.”

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“While employing the right talent is critical for businesses and especially start-ups, it also means spending man-hours undertaking tedious payroll management processes without leaving any scope for errors. This continues to be one of the most challenging tasks in business finance and it is time that organisations move on from age-old manual processes and instead choose automated solutions so that they can save time, optimise operating costs and focus on business growth and employee experience,” said Kumar.

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