E-commerce is new go-to sector for executives
Bangalore/Mumbai: Until recently, it was common for executives at established companies to view e-commerce firms with scepticism bordering on disdain.
Now, as confidence in India’s e-commerce story grows, several senior executives from sectors such as telecom, consumer goods and retail are starting to show interest in joining top e-commerce firms which offer higher salaries and promise lucrative payouts when they sell their shares on stock markets.
After the telecom boom of the early 2000s, when it became the go-to sector for ambitious executives looking to help build large businesses and pull in handsome salaries, e-commerce companies led by Flipkart are starting to generate similar interest among executives.
“There’s a lot of interest among executives in various sectors in shifting to e-commerce, like it was when telecoms started to boom,” said Avdesh Mittal, regional sector leader, digital media, at executive search firm Korn Ferry, which works with e-commerce companies. “However, the biggest difference is that unlike telecoms, there’s a massive wealth creation opportunity in e-commerce. During the telecom boom, not many people really got rich; it was mostly the promoters who created wealth. In e-commerce, you will see many more executives becoming millionaires.”
Over the past six months, Flipkart has hired several senior executives from other sectors. Such lateral hires include finance controller Rajnish Baweja who joined this month; he was regional chief financial officer at Bharti Airtel International (Netherland) BV; vice-president, projects, Nagesh Rao, who helped build the retail business at Aditya Birla Retail; and vice-president, legal, Srivals Kumar, who has worked with Bharti Airtel Ltd and the GVK Group.
Other large e-commerce companies attracting top talent include the Ibibo Group and the People Group, which owns Shaadi.com. Ibibo named Rohan Patnaik, a former Hindustan Unilever Ltd executive, as the head of supply and operations at its bus ticketing unit redBus in June.
The changing attitude toward e-commerce reflects the strong revival of investor appetite for India’s fledgling Internet firms and the seriousness with which these firms are being looked at by the corporate world.
The India entry of the world’s largest online retailer Amazon in June 2013, explosive sales growth reported by Flipkart and Snapdeal and their ability to attract hundreds of millions in funds are some of the factors that have boosted the credibility of e-commerce as a sustainable industry.
Online retail is worth $3.1 billion, or 10% of the organized retail market, and is estimated to grow to $22 billion, or over 15% of the organized retail market, in five years, according to a November 2013 report by brokerage firm CLSA.
“There is a lot of interest in working for Flipkart because the potential is so large and over a long period—barely 1% of Indians shop online and that’s going to grow to 15-25%, so the growth is going to be massive over the next five to eight years—as we’ve witnessed happen with Alibaba in China,” said Mekin Maheshwari, chief people officer at Flipkart.
“We offer executives the chance to shape the present and the future of this industry, put their own stamp on it, and that excites them. We are competitive when it comes to salaries, but there’s also the large wealth creation opportunity, alongside the growth of the company that few other companies offer. When you think of the valuation that Flipkart can reach in the next few years, stock ownership becomes a very lucrative option,” Maheshwari said.
“Apart from the skill sets of a given job, we look for people who’ve started businesses, built something from scratch and taken it to a large scale. We are also interested in people who have led a major transformation or turnaround—basically led drastic changes in a business. Having at least one of these two traits is key because at the rate at which we’re growing, it requires people to be able to adapt quickly.”
According to Nishchae Suri, head of people and change practice and partner, management consulting, KPMG, “What happens is that once people at senior levels take the jump and join an industry, it gives encouragement to others and increases the credibility of the industry and then their juniors follow. E-commerce is a fast-growing business and it’s likely to see this happen.”
Hiring by e-commerce companies has risen significantly at B-schools, too.
For instance, at the Indian Institute of Management (IIM), Bangalore, companies such as Amazon, Flipkart and Jabong together hired 26 graduates this year, an increase of 50% from 2013, said Sapna Agarwal, head, career development services at IIM, Bangalore.
“Traditionally, consulting, banking and financial services have been the large recruiters in B-school campuses. Though only 6.7% of the batch was hired by e-commerce companies, it is the only sector that has showed a large increase in hiring over last year,” Agarwal said.
However, some headhunters said it still takes some convincing for people to join some e-commerce firms, especially as there is wariness about the sustainability of businesses outside the top 4-5 companies.
“The failure of some sites in the past has led to caution among people outside the industry. The attitudes are changing, but slowly, and it still takes a very sweet deal for most people to move to e-commerce,” said Simran Singh, founder of Simran Singh and Associates, an executive search firm that works with brick-and-mortar retailers and e-commerce firms.