The Story of Overpaid Talents in Indonesia's Tech Startup Ecosystem

There are several factors to justify the price for digital talents

Bintoro Agung - 20 February 2020

It is quite common to find most startups offering substantial salaries for a series of expertise. Software Engineer, for example, is a type of work that is often associated with a high salary in startups.

Not only engineers but some other occupations are also tempted by a large sum of salaries. All this is inseparable from the combination of imbalanced supply-demand human resources and startup culture that emphasized rapid growth compared to traditional companies.

Recently, there was a problem as we observed the startup habit of giving exorbitant salaries to their employees. First, when funding dried up, employees' layoffs can occur quickly. Second, their previously high salary can make it harder for companies to recruit due to their grade which is considered above average.

The budget hotel startup, OYO, has recently made the news after firing thousands of its employees in India, China, and also in the United States. Similar official announcements have not yet been heard from their operations in Indonesia. However, rumors have been spreading on social media.

We discuss with several people from the headhunter's office to find out more whether it is true that startups are to "blame" for resources' too expensive labels and considered "damaging prices".

Lack of Resources

David Wongso, who works as Transearch International's Managing Director, a human resources recruitment company, said that the first thing to understand is the availability of human resources which is sadly not getting along with the growing number of startups in Indonesia, at least until 2030. Not only startups, but the rise of conventional companies to digitize their businesses also add to the imbalance of the supply-demand of digital talent.

David also discovered another factor on the lean structure of startups that often caused some employees to level up so quickly from junior to senior management. Therefore, David said it is not surprising that such a large gap can causes remuneration for some human resources swelling.

"Some of them get leapfrog promotions jumping from middle to senior management," David told DailySocial.

Rendi - an alias - is Gojek alumnus with expertise in marketing. The ex-Gojek status has successfully paved the way to join other startups. Although, not exactly as stated by David, Rendi managed to jump over mid-level management when moving to another startup.

Rendi agrees on the startup habit that is willing to pour out a large amount of remuneration of the desired talents. However, this does not apply at all levels and places. As Rendi said, his previous office only provides fantastic remuneration at the senior management level, not the junior and middle levels.

"For example, entry-level marketing for the strategic category has quite low offering. Nevertheless, other marketing positions such as Head or VP or any kind can be the real deal because mostly hijacked from big companies," Rendi said.

High Demand

Another story comes from Haryotomo Wiryasono who works as a senior consultant at Glints, a recruitment platform. Haryo claimed that the term overpaid for startup talents is quite debatable.

According to Haryo, the demands and workload of startup employeesare the main factors of the high salary. Investors' pressure to achieve growth and impact leads to the extra work of the startup members. This is different from the conventional business model of the company which focuses on profits and the company's long-term survival even though the results are slower growth.

"They don't have the privilege of conventional companies. While we know that one of the startups that we know the oldest, like Facebook, is still in its teens but it has a huge impact," he explained.

The three people above admit that startup culture influences the workforce climate. Haryo claimed to get a story from his client that the price tag of startup talents is too expensive. Rendi, in his new place, had failed several times to acquire talents of well-known startups because of the different standard salary.

However, David who has a long journey in the HR recruitment sector said the expensive price tag was not everlasting sweet. It'll soon be a burden for the workers if they are unable to meet the expectations of their price tags. In the end, exorbitant salaries for digital talents who have worked in startups can be justified if they succeed in bringing their expertise, which is actually needed by many companies.

"Indeed, digital talents selected and eliminated from startup, when they return to work in large companies, they must be able to adapt to the company's culture. Whether they are overpaid and have no leadership and managerial skills, it will be an obstacle for them," David said.

Original article is in Indonesian, translated by Kristin Siagian

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