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| Recruiters Revised. |
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| With the economy on a roll, the recruitment services industry in india is witnessing a spate of alliances between foreign and domestic players. Cd explores |
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ONE would imagine that a Nasscom summit is a hotspot for exploring deals exclusively in the IT sector. NOT necessarily so, if one goes by the experiences of Ian Herbertson, managing director of the Asia Pacific operations of the $15 billion recruitment services firm, Manpower, and Bish Agrawal, chairman of one of Indias first recruitment services company, ABC Consultants. Their discussions for a possible partnership which began on the sidelines of the 2004 summit in Mumbai, culminated recently in a joint venture deal estimated at over Rs 150 crore. While the actual value of the deal is open to interpretation, its certainly larger than all such previous alliances in the sector put together, and theres one thing everyone is quite convinced about-the recruitment services business in India is in the midst of its most active phase of consolidation. In a span of just eighteen months, there have been four mega deals involving the biggest global and local players in the industry. It all started with Dutch major Vedior picking up a 76 percent stake in MaFoi Management Consultants in March 2004. Next month, online recruitment leader Monster.com announced the acquisition of JobsAhead.com for $9.6 million as part of its global acquisition drive to boost revenues. In November, Adecco International, the worlds largest recruitment firm, entered the country after buying a 66 percent stake in PeopleOne. Now with the ABC-Manpower tie up, that leaves only one out of the top five players in the country-Bangalore-based Teamlease-without a foreign partner. Industry watch ers, however, say that Teamlease is currently scouting for a foreign partner or a sell-out.
So whats behind this part nering frenzy? The size of the business opportunity, for one. With a labour million people, nearly a quarter of which is employed in the service sector, India is definitely among the countries where the action is going to be. Indias engineers, scientists, technicians and skilled personnel are rated among the best in the world and its education system produces well-qualified graduates who are much in demand across the world. And, given the long-term demographic trends and a booming economic scenario, skills shortages are expected to become increasingly severe-thus making India a fertile ground for recruiters to build their businesses. "The potential for growth in the BRIC (Brazil, Russia, India and China) countries is far too large for multinationals to ignore," says Ajit Issac, MD, Adecco PeopleOne, adding that its Indian operations ranks among the top 10, in the 66 countries that Adecco is present in. While its understandable that for most multinationals,
emerging markets like India will be the growth drivers,
whats also driving this trend of transnational partnership is the changing dynamics of the Indian recruitment industry. "Till recently, the recruitment services industry was much like Chinese restaurants entry barriers were low and every one, along with his friend, was setting up a placement services shop," says Issac. "Now, the market is getting matured and you need scale and size in order to survive." Margins have been falling for some time and recruitment has moved beyond the plain-vanilla formula of submitting a list of potential candidates to a client. Higher attrition rates and the war for talent are forcing multinational companies to demand value-added services, globally validated recruitment tools and best practices from placement service providers. "There is a crying need to build delivery processes and end-to-end HR solutions for clients," points out Agrawal. Indian companies are, therefore, left with little choice but to scout for global partners who bring not just their MNG clients but valuable learnings from other markets, as well. "While it isnt absolutely necessary to tie up with a foreign partner, it does help as they bring in clients, more evolved practices, end-to-end management HR solutions, proprietary tools and recruitment process management tools," says K Pandia Rajan, MD, Ma Foi.
The changes are already beginning to show. For instance, from a combined strength of 370 consultants, Manpowers Herbertson intends to scale up business to a level that will justify 1,000 consultants in three years from now. That would require pursuing business opportunities, which were previously unexplored. Says Agrawal, "We have been the leader in the direct hire segment in India but missed out on the temporary staffing business that has been growing at a phenomenal rate." Since Adeccos buy-out, PeopleOnes operations have grown to 30 branches from just eight and its client strength has more than doubled. In the meantime it has also brought in specialised agencies from Adeccos International operations-Cornell International, a boutique executive search firm, and Lee Hecht Harrison, a specialised division offering career training and leadership development services. Its also begun offering managed services, a highly lucrative business involving taking over of the entire HR and recruitment process of a client. MaFoi, which itself has operations in seven countries in addition to Vediors global spread, is now offering a highly specialised service of interim management- getting highly skilled professionals at or above the rank of functional heads to work with a company on a specific project, and then move on.
While the focus has been traditionally on private sector business, MaFois Pandia Rajan suggests looking one step ahead at the 998 employment exchanges which have 12,000 employees and a database of 4.5 million registered job-seekers, and yet manage to place only 1.7 lakh people a year. Hes hoping that the government will open up its employment exchange infrastructure to private participation. "Opening up this government infrastructure for private-public partnership will throw up new opporninities for our industry, and the government can learn how it was done in UK and other countries."
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