Bengaluru: Six start-ups that went back on their word to hire graduates from the Indian Institutes of Technology (IITs) will be blacklisted across all IITs in the upcoming placement season, placement heads of 16 institutes decided at a meeting of the All IIT Placement Committee held in Mumbai on Friday.
These start-ups will be barred from hiring from IITs in 2016-17, said Babu Viswanathan, placement advisor at IIT-Madras.
The blacklisted companies will be allowed to visit campuses next year after they appear before the placement committee, Viswanathan clarified.
He added that he was not allowed to disclose the names of the start-ups.
Besides, start-ups that cited business environment to slash salaries they had originally committed to paying IIT graduates, also risk being blacklisted if they do not accept the students at the originally promised package, Viswanathan said.
At least five companies had reduced salaries by as much as 25%, he said.
“We are giving these companies a week’s time to respond. If they don’t respond, they will be blacklisted,” he added.
Start-ups have gained prominence on campuses and account for about 20-30% of all companies that come to IITs. In fact, at IIT Madras alone, the number of students joining start-ups rose from 13.7% in 2014-15 to 33% in 2015-16, Viswanathan said.
“Their presence is growing. So, to avoid any fallout, we want to send the message that only if you are serious about hiring our students, come to the IITs,” he said.
The decision was not welcomed by all.
T.V. Mohandas Pai, former Infosys CFO and a prominent investor in start-ups, said it was an immature and insensitive decision on the part of the IITs.
“It is a mercenary system. Students want to go to highest bidder and the highest bidder in turn is governed by market conditions. Moreover, these students also leave in about six months, so it is a very unfair decision to blacklist companies,” Pai said.
Companies, though, were not surprised.
“Blacklisting is an expected outcome. Relationships with campuses are long-term; so, a blacklisting does hurt the reputation of the company on campus for a certain amount of time. So, companies should be a little cautious about hiring and plan better,” said Amit Sinha, vice-president (business and people), Paytm, which hired about 50 students from IITs and other top engineering colleges in December.
As for companies such as Flipkart and Roadrunnr that deferred the joining date for campus hires, the IITs have decided to take no action as the companies have already tried to find alternative solutions, said Kaustubha Mohanty, convener of the placement committee.
Flipkart has managed to find alternative paid internship opportunities in about 10 start-ups like Rivigo, a logistics firm, and GreyOrange, a robotics company.
The IIT alumni of the e-commerce marketplace went about finding suitable opportunities in other start-ups and all the graduates it hired have been found opportunities, said a Flipkart spokesperson.
They will be paid Rs.50,000 a month during the course of this internship, with the option to either join Flipkart in December or continue to be employed at the start-up.
“It is a good move. This is definitely better than doing nothing. But the internship opportunity is not really like what I would have gotten at Flipkart. It is still a compromise,” said a student whose job offer at Flipkart has been deferred by six months. The 24-year old said he is also pursuing other job opportunities.
Flipkart and other start-ups made offers to 150 graduates at the IITs alone last December. In May, Flipkart asked graduates from IITs and IIMs to join the company in December instead of June.
Roadrunnr has also agreed to reduce the period of deferment from December to September, Viswanathan said.
Decisions on the kind of placement slots to be offered to start-ups and whether students should be allowed to accept more than one offer will be left to individual campuses, he said.
The placement committee, which usually meets twice a year, met out of turn on Friday to thrash out a strategy after Flipkart and other start-ups such as CarDekho and Hopscotch deferred the joining date of students from IITs and Indian Institutes of Management (IIMs) by four to six months. The IITs felt the need to lay down some ground rules before campuses send out invitations to companies in July for the next placement season.
The IIT placement committee’s action follows a scathing letter from IIM Ahmedabad to the Flipkart management, made public last month, in which it castigated the company for postponing the hiring of graduates by six months due to its ongoing corporate restructuring.
The company, and the sector as a whole, has been going through a turbulent time, with funding coming down and valuations being slashed.
Investors infused some $1.15 billion in Indian start-ups in the first quarter of this year, down as much as 24% from the December quarter, which itself had seen a slump in investments of 48% from the preceding three months, according to a joint report by KPMG and CB Insights.
The number of start-up deals also fell 4% to 116 in the quarter, the report said.