Around 39% startups are going to fork out a 10-20% hike this year, but a whopping 63% said they will keep the hike unchanged in FY26 as well

Staffing firms project a 20-30% surge in hiring by startups in 2025

ESOPs are likely to ease the disappointment of flat pay hikes with promises of long-term wealth creation

There’re signs of a disappearing freeze on funding for startups, but the chill has descended on pay hikes, it seems.

If 39% startups are going to fork out a 10-20% hike in the financial year ending March 31, 2025 (FY25) then a whopping 63% will keep it to that level in FY26 as well, shows The Pulse Of Tech report, the Annual Founder’s Survey by Inc42.

The survey that covered more than 100 founders of leading startups operating in different business lifecycles – seed stage, growth stage and late stage – shows that 40% of respondents are looking to limit the hikes to 15% in 2025-26, while only 23% will shell out 16-20% increment.

“I believe that organisations providing salary increments of 9% to 12% are maintaining a healthy increase, especially considering that salary inflation is around 10%,” argued Satheesh KV, the chief people officer at insurtech startup Acko. “For high-performers, of course, there’s room for up to 20% hike.”

The wide 10% range in projection for FY26 is because the ecosystem consists of companies in different stages of the business cycle, which becomes a major factor in determining the median salary hike in the industry. Internal hiring processes and appraisals too vary across companies.

Going The Extra Mile For Top Talent

It is fairly easy for popular brands to attract and retain talent. But the job is harder for smaller setups in their early stage lifecycle and they often need to offer higher pay hikes.

Nakul Kundra, who cofounded Devnagri, said they are ready to loosen the purse strings to retain talent in the company. For the coming fiscal year, the AI-powered language translation platform will have a median appraisal of 20%, while top performers in the company can get anywhere between 30% and 40%. “To retain our best performers, we don’t mind giving hikes above industry standards.”

Travel aggregator MakeMyTrip, too, hopes to outgrow the benchmark. “The industry average hovers between 9% and 10% and we, as a company, would likely stay above it,” group chief human resource officer Yuvaraj Srivastava told Inc42.

Achieving a pay parity is a challenge in the industry. Many organisations do not have strong people practices that help in meeting their pay parity goals. “Organisations that do not have strong internal parity practices, particularly when hiring talent, often end up paying higher increments to correct compensation disparities,” said Acko’s Satheesh.

According to an Inc42 analysis, 23 startups offered ESOP liquidity opportunities, valued in excess of $170 Mn, in 2024. The total value of ESOP buyout stood at a whooping $800 Mn a year ago, which was a three-year peak.

The Swiggy public issue floated last year stands as a major testament to the power of ESOPs. Nearly 500 former and current employees of the food delivery startup joined the ‘crorepati’ club.

The startup workforce may not find an attractive pay hike next year, but long-term wealth-making opportunities may keep their disgruntlement away.

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