Recruitment Industry – Scalability secrets from the horse’s mouth.
If you are an outsider, you might feel that the recruitment industry is a goldmine
The head-hunter gets a princely sum of money 8.33% of CTC for each candidate who has joined. Thus effectively for just 1 CV, you can get a cheque of a lac rupees in return.
Theoretically then, this should be a super-scalable model where you can bill a few crores p.a. easily, even if you are working in a specialised niche like Chartered Accountants, Costs Accountants, Company Secretary like CAJobPortal.com does.
Here’s a case why
In the era of social media recruitment and online databases, head-hunters have kind of become obsolete. The HR tries to close positions internally. By posting on LinkedIn, iimjobs, WhatsApp groups etc, they try to source candidates. The next preference is Employee Referral – by giving a 10k referral bonus to employees, they try to close positions.
Maybe after trying for 6 months, when they cannot close them, the give it to consultants. Often the mandate is given to the Davids of the world, after the Goliath’s have endeavored for months to find Mr Right. And every resume that you send will become Duplicate i.e. it already exists in the HR database and thus, you won’t get any credit for it
The consultants are remembered only when there is a desire for these Purple Squirrels.
You often find yourself working on these elusive searches for the ‘Purple Squirrels’. “CA, 7 years PQE, FMCG, Plant Exposure, SAP” within a Target CTC < INR 32 lacs p.a.” . Since the consultant gets paid, the HR will become super demanding with all the filtyers,
When Mr Right is finally found and is rolled out the offer letter; the countdown to the joining date starts. It is that princely sum of money (8.33%) which awaits us.
But then lightning strikes – Mr Right backs out as his current company matches the hike offered, owing to personal reasons, he will not relocate and stay in Delhi NCR itself etc. and thus the party is over. All hopes are quashes and begins again the elusive search, this time probably looping in another consultant into the fray. Because your candidate backed out
In India, the recruitment industry is a “Red Ocean” from a strategic perspective. In absence of any specialised professional qualification or relevant certification for being a Consultant, absence of professional code of conduct and lack of work experience, the entry barrier is simply one buying a recruiter access to a database like Naukri.com and a few contacts in the fraternity, you find that this has become an overly competitive industry. Consultants are so dispensable. Unless you are like a Randstad, Ergon Zehnder or Michael Page, there are just so many like you, running after the HR for vendor empanelment.
A lot of companies open a mandate to 25 consultants, putting them in bcc on email. Pitted against each other, the race is to upload the resume on the Company Recruiter portal ASAP, else the other consultant is going to do it and your upload will be marked as Duplicate.
A major challenges that one need not mention here is the special affinity a Company HR could have for a particular agency. Of course, it often also depends a lot on the Corporate Governance practices in that company. But certainly, kick-backs in this industry are not out of the world. The practice does exist. You will take 3 rounds of CV sending and waiting for responses / getting the response “Technical Screening Reject” to realise that the HR is just not interested in closing the position through you.
The candidate also has no loyalty to you. They will often try to bypass you because the perception is that the candidate will get a lower CTC if a consultant is involved J
The other challenge is that as the HR manager who gives you work moves to a different role/ changes company, the new HR brings in new vendors. Continuity is mostly not maintained here. So it means you have no guarantee of repeat business, even if you successfully closed mandates. ‘
Thus while the agency struggles with the above issues as well as Fixed Costs of the setup, certainly the online marketplaces and database sellers make a killing. Consider that for Q2 of 2019-20, naukri.com clocked Recruitment segment billings of Rs.209.8 crores, up 14% YoY and Iimjobs, the 10-year old portal, recently acquired by naukri.com; reported billing of Rs.4.63 crores.
In essence, before you take the plunge into this apparently very lucrative industry, where you get paid lacs for just 1 CV, think again
Sonia Singal is a CA and CFA by academic qualification. She is an entrepreneur and her venture CAJobPortal.com is India’s first finance focussed recruitment platform that has been working like an agency for 125+ marquee brands in 6 countries.