New Delhi: The startup community based in Gurgaon has been unnerved by the Haryana job reservation law that proposes to reserve 75% of private sector jobs that pay a salary up to Rs 50,000 a month for those domiciled in the state.

Many new age companies, including startups, may have to consider relocating operations, according to Nasscom and staffing firms such as Quess and Xpheno.

Startups see Noida, Greater Noida and Delhi as the best bet if they don’t want to move too far away. Bengaluru has the largest number of startups and unicorns in India and may attract more from Haryana. Delhi NCR follows Bengaluru in having the largest number of startups, unicorns and soon-to-be-unicorns (soonicorns), with many located in Gurgaon.

According to a Xpheno survey, out of 80 India-based companies in the unicorn and soonicorn categories, 12 are in Gurgaon. They include Droom, GreyOrange, Indus Towers, Delhivery, Makemytrip, Oyo Hotels and Homes, PolicyBazaar, ReNew Power, Rivigo, Shopclues, Snapdeal and Zomato.

“While certain jobs will move out of the state in search of talent, reservation could also trigger potential upskilling and cross-skilling investments to create a local talent pool,” said Kamal Karanth, co-founder of Xpheno.

These 80 companies employ 220,000 people across India and about 11,000 of them in Gurgaon. About half of these are non-locals. “The employee count in the sub-Rs 50,000 per month category within Gurgaon among 11,000, is estimated to be about 50%,” said Karanth.

The
Haryana job reservation law could have a deleterious impact on the state’s startup ecosystem, Nasscom said.

“Job reservation will also negatively impact the fast-growing tech entrepreneurship in the state,” Nasscom’s Senior Vice President Sangeeta Gupta told ET. “From scale up startups to early-stage, access to talent and skills is key. Startups need nurturing, and not added burden of compliance.”

Nasscom estimates Haryana has been home to 700 tech-based startups in the past five years. This doesn’t include unicorns and soonicorns. Big e-commerce and new- age companies such as Zomato, Makemytrip, Snapdeal and startups like Rivigo and Urban Company are also based in Gurgaon. Zomato, Snapdeal, Paytm, Makemytrip, Biryani by Kilo and Urban Company didn’t respond to queries.

“This (the Haryana job reservation law) will have an impact on existing startups and even more on budding entrepreneurs. Companies may start exploring locations like Noida and Greater Noida,” said Vikram Gupta, founder and managing partner at IvyCap Ventures, a venture capital fund with investments in a few startups that are based in Gurgaon, including Biryani by Kilo.

Entrepreneur Anuj Krishan said the move will make Gurgaon less attractive.

“Such restrictions will greatly hamper the prospects of Gurgaon as a startup hub,” said Krishan, a former chief operating officer of B9 Beverages (Bira 91) and now co-founder and CEO of packaged snacks venture Forbidden Foods. “Most startups see Delhi NCR as a unified market for talent and this bill will make entrepreneurs rethink about setting up in Gurgaon. There is a serious risk of flight of startups and hence job opportunities from Gurgaon because of this measure.”

According to Vipin Agarwal, founder of Global Launch Partners that helps growth- stage companies launch international operations, “Logically, proximal cities in the NCR region that do not force such compliances will be the first port of call for such startups and companies.”

The measure will lead to companies looking elsewhere, according to Quess Corp.

“Startups and entrepreneurs flow like water, attracted by quality capital, environment and talent,” said Lohit Bhatia, president (workforce operations) at Quess. “Disruption to any of these will lead to migration from Haryana to the neighborhood like Delhi and Noida.”

Also Read:
Haryana job reservation law may trigger IT exodus from Gurugram

Finding replacements for those who leave may also prove difficult.

“While the reservation may not push out the currently employed, refilling vacancies arising out of attrition will be the puzzle to solve under the new rules,” Karanth said.

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