human resource solution industry
TRANSCRIPT
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Human resources
solutions industryStepping into the next decade of
growthJanuary 2012
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Foreword
Over the last two decades, ndia!s image as a land of sna"e
charmers has changed rapidly to that of a power house of
human resources# Our greatest resource today is our people,
$e it our entrepreneurs or our large, young and vi$rant wor"ing
population#
ndia!s human resource industry, dominated $y talent
ac%uisition in the form of recruitment, temporary sta&ng and
executive search, has $een growing $e an estimated '()* of
21+ over the last four years and is now estimated at more
than *22- $illion#.any glo$al players have entered the ndian mar"et over the
last decade and some are poised to ma"e the %uantum leap#
/his mar"et is rapidly moving
from a highly fragmented and unorganied sector to a
structured and organied industry#
/he xecutive *ecruiters (ssociation *(3 is a non4proit
cham$er of commerce representing ndian executive
recruitment consulting irms# *( was formed with the
o$5ective of creating professional and ethical standards of
recruitment and esta$lishing the recruitment process as an
industry#
*( and rnst and 6oung are pleased to present to you the irst
comprehensive report on the ndian recruitment and H*
services industry# would li"e to express my gratitude to rnst
and 6oung and all the industry people who contri$uted to
ma"ing this report#
Vipul
Varma
'hairman
*(
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1# Introduction.............................................................................................................3
1#1/he Human *esources H*3 solutions industry7 an introduction......8
1#2.ar"et sie............................................................................................. .....9
1#: ndustry structure.......................................................................................;
2# Permanent recruitment.................................................................................ermanent recruitment
< Human resources solutions industry
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20+
-0+
>ermanent recruitment is estimated to $e an *:0 $illion1 mar"et#
2#1 Introduction
/he permanent recruitment mar"et is estimated to $e in the range of *2-@*:1 $illion1#
/his segment can $e divided into executive searchL and recruitmentL# Search,I $eing a
niche category, is focused on hiring of 'MO4level positions in an organiation, while
recruitment is for mid4 and 5unior4level positions#
"xhi#it 3: Permanent recruitment maret split in '($$ 0
*ecruitment
Search
Source7 rnst K 6oung (nalysis
>ermanent recruitment is a four4step process of sourcing A screening, selection and on4
$oarding of candidates A with sourcing $eing one the most critical steps, since it involves
short listing and attracting the right candidates from the pool#
Sourcing of the right candidates ta"es place through campus recruitment programs,
employment agencies, internal referrals and 5o$ portals# However, employment agencies
and referrals account for more than ;9+2 of the candidate sourcing process# Sourcing of
candidates through employment agencies is now gaining traction and currently has a :0+2
share#
"xhi#it 1: /ourcing share
20+
19+
:0+
mployment
agency
mployeereferral'ampus
Others
:9+
Source7 rnst K 6oung (nalysis
n F611, around :;0 thousand1 candidates got placed through employment agencies across various levels#
1 rnst K 6oung (nalysis, wor"ing given
in appendix 2 ndustry estimate
ote7 L Search is for positions drawing an average salary of 80 la"hs and a$ove, recruitment is for positions drawing salary of 1#- la"hsand a$ove
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Human resources solutions industry -
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2#2"xecuti%e search
2#2#1 Introduction
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2ey players:
gon
Nehnder,
Heidric" K
Struggles,
*ussel
*eynolds,
Spencer
Stuart, orn
Ferryand
/ransearch,
(mrop
n the early =0s, executive searchI was less prevalent, and small
placement agencies dotted the landscape# t was all a$out data$ase
recruiting# /he transformation was noticed after the economy
opened up with multinationals setting up shop in the country#
Pusiness for the ndian search industry largely emanated from glo$al
.'s and accounted for -9@=0+: of their revenues# /he space was
dominated $y H* consultants such as (P' consultants and .afoi#
/he end of the =0s and the early 2000s saw the entry of
some glo$al search companies such as (mrop, gon
Nehnder, orn Ferry, /ransearch and Heidric"
K Struggles into ndia# (t that time, these .'s followed the policy
of their
international 'MOs heading their ndia operations#/he mid2000s saw the emergencies of new industries and the need for
local talent led multinationals to demand a more scientiic approach
to top4rung hiring# Darge search companies $egan importing their
"nowledge $ase, glo$al $est practices and proprietary tools to their
ndian su$sidiaries# /here were also new entrants such as *ussel
*eynolds and Spencer Stuart#
/he search mar"et is estimated to $e *;@< $illion1,with a$out
;,0001 placements through consultants, in F611# (t the 'MO, $oard
and top levels, $usiness is traditionally deined as a retained search
with the client paying a fee at the $eginning of the service, and is
not lin"ed to the success of the search3 and a contingency search,
with fees in the range of 29@:0+
2
#'urrently, the search mar"et, $eing a niche category, is
dominated $y large glo$al search companies li"e gon
Nehnder, orn Ferry, /ransearch, Heidric" K
Struggles, *ussel *eynolds, Spencer Stuart, (mrop, etc#, that have
a mar"et share of Q80+2# Small companies ind it di&cult to get
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earch mar"et is estimated to $e in the range of *; @*< $illion1 and is largely dominated $y glo$al comp
t will ta"e us at least 10 more years to $ecome a prominent player within the executive search
space#I
Mid-sized recruitment solutions company
1 nrst K 6oung (nalysis, refer
appendix2 ndustry estimate: E/he Hunted /urn Hunters!, Economic times, ; Jan 2011
= Human resources solutions industry
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Darge executive irms have startedproviding 'MOs for short tenures of one to three years to stressedinvestee companies, to ena$le them to turn around their operations, or to companies loo"ing for su$5ect matter experoll4out plans to enter new sectors#
CHuge demand for 'MOs onprivate e%uity investors fo
C
Remand from large corporateorganiations planning to enter new sectors and cond
2#2#2 ro&th dri%ers
1# 4arge companies di%ersifying into ne& sectors
Darge ndian conglomerates are now diversifying from their core $usinesses and
venturing into new emerging industries# /his has opened up opportunities for search
companies to $ring in people at the top level, who have relevant experience in these
sectors#
2# 4arge M56s in automo#iles7 luxury goods7 and agricultural and food #usiness setting up shop inIndia
( large num$er of .'s are trying to gain a share of the ro$ust and growing ndian
economy# /he gloomy outloo" for most of developed economies has forced companies
operating in these to shift their focus to emerging economies such as ndia# Darge
automo$ile companies have entered the ndian mar"et in the last three years and are
in the process of expanding their footprint to withstand competition and capture the
mar"et# Darge agri food players have entered the ndian mar"et and are loo"ing at
expanding their presence across di?erent categories inorganically# Darge luxury goods
companies are expanding their portfolio and presence in ndia to $e a part of the
consumption story and ride on the growth momentum# .'s extensively use search
companies to source the right people to head their ndia operations, and with the inlow
gaining momentum, we expect their growth to $e ro$ust#
:# Acceptance and adoption of search companies #y large family o&ned conglomeratesn most emerging countries such as ndia, a signiicant component of )R> is contri$uted
$y family4run companies# t is therefore vital to ensure that these organiations are
ade%uately resourced, $oth inancially and with human capital# arlier, in large family
owned $usiness conglomerates, top level hiring was primarily through referrals, $ut
changes are now $eing o$served in the new generation at the helm# /he family run
$usinesses are increasingly using the services of search irms to $ring in the right
candidates with the re%uired experience and s"ill sets#
2#2#: "merging trends
Dargeexecutive
search irms
providing 'MOs
on hire for a
short term
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e search mar"et is growing on the $ac" of domestic and international companies Eexpansion and entry plan
Human resources solutions industry 10
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2#: Recruitment
2#:#1 Introduction
ndia!s recruitment industry has grown with the rising prominence
of industries such as /, telecom, retail, pharma, /S and
hospitality# /hese industries have shown signiicant growth on the
$ac" of strong demand from the rising ndian consumer class and
the dominance of ndian companies in the outsourcing space#
/he recruitment industry has evolved on the $ac" of the increase
in the demand for wor"force on the talent ac%uisition and the
client fronts# On the talent ac%uisition front, the change has $een
signiicant, from a mere match4ma"ing function and career
counseling to competency4$ased assessment hiring# On the client
side, it has moved from a re%uirement4 $ased fulillment system to
turn"ey pro5ect4$ased hiring to hiring for value added services(S3#
/he recruitment mar"et is estimated at *2:@*29 $illion1,
with a$out :90 thousand1 placements through consultants in
F611#
/he mar"et for mid4level recruitment is dominated $y large ndian
players such as(P' 'onsultants and .afoi# Darge .'s such as
.ichael >age, 'andyRate Jo$s, Hunt >artners, elly and orn
Ferry have also entered this space# /he segment also faces
competition from small recruitment companies that cumulatively
have a signiicant share in the pie#
/he segment is evolving from an unstructured and fragmented
ecosystem to players that are adopting new norms of productivity
and cost e&ciency, where resume pushersI who do not add
value to clients3 will eventually get marginalied# (t the middle
management level, $usiness is mostly contingent in nature#
'lients pay a fee of 12@1;+2 of the annual cost4to4company
salary3 once candidates 5oin organiations#
Pul" recruitment is generally at a lower level as compared to themid4level recruitment process# (t the low level, the industrycontinues to $e volume4 driven#I
/he recruitment mar"et for the 5unior level is dominated $y a large
num$er of small
companies and 5o$ portals from which companies generally source
proiles# Peing
a volume4 driven segment, the focus is more on the turnaround
time than %uality# Hence, having a large data $ase is of prime
importance# )iven the volume nature of this industry su$4segment,
fees for consultants may $e lower in the range of
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*ecruitment is evolving from an unstructured and fragmented ecosystem to playersadopting new norms of productivity and e&ciency#
1 rnst K 6oung (nalysis, refer
appendix
2 ndustry estimates
11 Human resources solutions industry
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2#:#2 ro&th dri%ers
1# ro&th in ey customer industries
ndia!s economy has $een growing at an average rate Q-+ on the $ac" of growth in its
"ey customer industries, e#g#, /, /S, retail, $an"ing, health care, hospitality and
others, which have $een witnessing signiicant growth#
/he country!s economy has $een maintaining its growth momentum on the $ac" of a
large middle class, their increased their spending and the )overnment opening up
sectors such as aviation , inancial services and retail for FR# 'ompanies operating inthese industries and other ancillary industries are expected to recruit ro$ustly# ndia!s
retail sector, after hitting a road $loc" in 200=, is expanding again on the $ac" of falling
real estate rentals, a $urgeoning middle class and the )overnment!s plan to $ring FR in
retail# Foreign $an"s that have o$tained $an"ing licenses in F611 are slowly increasing
their wor"force#
Sectors such as retail, PFS and life sciences continue to need talent#I
HR solutions provider
2# 5e& emerging sectors
/he economy has grown ro$ustly in the last decade on the $ac" of sunshine sectors
that emerge every few years# n the early =0s, it was /, then /eS, telecom, retail
and $an"ing, and now it is consumer goods and health care#
very year, there is a new sector that does a lot of hiring, resulting in attrition across otherindustries# /his has a cascading e?ect, which $eneits recruitment companies#I
Large recruitment player
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(P' has formed a J with (lexander.ann Solutions#lixir and >eople Strong are other players that have entered the segment#Other small players also o?er *>O as a service#
C*>O can have a canni$aliing e?ect ontraditional forms of recruitmentT hence, to avoid any loss of $usiness, most recruitment providers have themselves
C*>O as a service is an annuity and theterm of contracts vary from six monthsto a year, providing a deinitive revenue source to recruitment4focused companies, wherein revenue is on
*ecruitment irms such as (P''onsultants have their own online portal, called Head Honchos,I on which they post 5o$s for senior4 level positions o.ichael >age has its own we$site, on which it has 5o$ listings, and re%uires users to register themselves to have thei
C .id4level recruiters have reto a data$ase of relevant ptherefore have a %uic" turn
C*ecruitment agencies can have higher
margins $ecause they do not need to share their reven
C /hey help recruitment irms$rand#
2#:#: "merging trends
*ecruitment
irms
providing
*>O as an
o?ering
*ecruitment
irms withtheirown
onlineportals
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orn Ferry2, through its su$sidiaryFuture Step, has entered the mid4 level recruitment segment#
C/he mid4level recruitment segment,which provides an opportunity of *1;#9@*1- $illion1, is characteried $y average margins lower than in execut
ecruitment irms have entered *>Os, which re%uire large setups and online 5o$ portals to $uild a $rand, to in
Darge
executive
search irms
entering
mid4levelrecruitmen
t K 6oung (nalysis, refer appendix
7UUhttp://www.orn!erry.com/!uturestep" #$ %anuary &$#&
1: Human resources solutions industry
http://www.kornferry.com/futurestephttp://www.kornferry.com/futurestephttp://www.kornferry.com/futurestephttp://www.kornferry.com/futurestep -
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2#8 6ritical success factors
"xhi#it 8: 6ritical success factors
/rac"
record ofdelivery
8#
1
9#0
8#
0:#0
2#0
1#0
4
etwor" ofclient
relationships
8#2
2#-
*angeof
serviceso?ered
Vualityofsalesteam
8#0
:#8 'ost ofservicesdelivered
:#; :#;
Source7 ndustryestimate
(ccess totalentdata$ase
>anndiapresence
'ritical factors for the success of permanent recruitment irms
1# 5et&or of client relationships
Having strong ties with companies and maintaining them in this crowded space is the "ey to
o$taining $usiness#
/his industry is characteried $y low entry $arriers and large volumes# /herefore,
companies need to $uild on their existing relationships to prevent their mar"et share
from shrin"ing# /hey should also foster new relationships to grow#
2# Trac record of deli%ery
Vuic" turnaround time and %uality of candidates sourced are important factors on which
the trac" record of delivery is measured# /his trac" record is critical for increasing
$usiness from existing clients and also to attract new clients#
:# 9uality of sales team
>ermanent recruitment is a relationship4driven $usiness# Having a %uality sales team to
source mandates from companies and to $e a$le to successfully ma"e a pitch to the
right candidates is critical for the success of companies#
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Human resources solutions industry 18
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ro&th dri%ers
$ro&th of the economyndia!s economy is expected to grow at a '()* of Q
.'ocus on human resource'hallenges relating to talent that organiations face today are manifold# /here is an increasing costimplication in inding and hiring talent, which is exerting considera$le pressure on most $usinesses, especially people4intensive on
/op managers in ndia are increasingly paying close attention to their people interventions as well as their H* spending# H* $udge6ompanies considering HR agencies as their partnersncreasing complexity in the nature of $usiness has led companies to partner with H* agencies# /hey now consider these agencie
Attrition of talent/he attrition rate in search or recruitment agencies is at 80+ @90+2, which is the highest across industries## Peing a people4driven.ro&th of online portalsBith the growth of online portals, companies! H* functions now prefer to directly connect with these to source relevant candidates!
3
2#9 Maret opportunity
"xhi#it ;: Permanent recruitment maret gro&th$
,'($$+'($8-'3 ndia, the apex $ody of engineering exporters,
engineering exports recorded a growth of =8+8 and ;0+8 during 1VF611 and
2VF611, respectively# /he increasing use of temporary sta? in the engineering
sector is expected to lead to growth in the demand for professional sta?#
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1 rnst K 6oung (nalysis, refer
appendix2 ndustry estimate
: PF,8 >'
Human resources solutions industry 1-
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.anpower, which was focused moreon recruitment and general stafing, has ac%uired BR', which is a large player in professional stafing#"ya, which was largely focused on recruitment and general stafing, has ac%uired .agna, which is only engaged in
C >rofessional stafing comargins#
C/ companies are pioneers in engagingtemporary employees, and therefore, companies do not need to educate
C/ companies are gradually inthe share of temporary sta? i
2# /hift to stafing model
C Bhat has $een rated as a leading H* trend worldwide, temporary stafing, is inally catching up inndia# Bhile industry experts estimate employee leasing at SG180 $illion2 glo$ally, the domesticstafing industry is yet to witness signiicant igures# However, this scenario is set to change, giventhe fact that in the near future, 2#9@:+1 of the country!s wor"force is li"ely to $e hired on atemporary $asis# /he / industry, $eing
a pioneer in stafing, is expected to witness a large percentage of such hiring in thenext few years, with thepenetration of a temporary wor"force in the segment $eing expected to increase from10+ to Q20+1#
:#2#: "merging ey trends
*ecruitment
companies
providing
*>Oas an
o?ering
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Stafing companies such as (llegisand (decco are moving up the value chain and have entered managed services# /hey underta"e supervision of leas
Stafingvalue c
/he growth the / and engineering sectors, along with increased sta&ng, is expectedto drive the growth of the professional sta&ng mar"et in ndia#
)eneral sta&ng companies are loo"ing at entering the professional sta&ng space,while professional sta&ng organiations are slowly moving up the value chain tomanaged services#
Sta&ng
companie
s
entering
managedservices
1 ndustry estimate2 http7UUretail#franchiseindia#comUarticlesU*etail4OperationsUH*4and4>eopleU'ontracting4trends481=U, 1- Recem$er 2011'ompany we$sites, merger mar"et, http7UUdealcurry#comU20110814.anpower4Puys4
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X /he general stafing industry is estimated at *11= $illion1 with around -=0 thousand1 employees sta?edthrough organied plaX )eneral stafing can $e $roadly divided into $lue collar and white collar recruitment# Bhite collar stafing is generally at the grad
eneral sta>ng ? &hite colla
X
X
/he general stafing mar"et is estimated at*--@*=2 $illion1, with 9=0 thousand1 employees sta?ed through consultantsin F611#)eneral white collar stafing has low margins of
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Bhite collar sta&ng is estimated to $e an *=2 $illion1 mar"et and $lue collar sta&ngto $e an *2< $illion1 mar"et in F611#
33.ro&th dri%ers
1# ro&th in retail7 telecom and IT"/
C ndia has $een ran"ed the fourth most attractive country for retail investment among:0 emerging mar"ets#/he country!s retail mar"et is estimated at SG8:9 $illion:,out of which only
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rowth in "ey user industries such as retail, /S and telecom, and the large companies shifting from unorga
largely positive# n the short term, telecom companies are tending to reduce their$ench strength and are opting for temporary sta? in their sales and maintenanceteams#
C ndia o?ers a uni%ue com$ination of services, which has esta$lished it as thepreferred o?shore destination for /4P>O# /he country!s share in P>O increased from:=4;:+1 over 2001@11# ts outsourcing industry continues to grow, $ut faces thechallenge of high attrition rates of 804;0+2, and the cost of training is as high as*80, 000: per person on an average# /herefore, companies have $een saving ontraining costs $y successfully using the temporary sta? model# Furthermore, therecould $e sudden spurts of demand from clients for which temporary stafing
companies may $e a$le to provide ready solutions#
Y sta&ng in core industries such as / and /eS will continue to $e on the rise as long as therearefavora$le exchange rates#I
2# /hift from unorgani!ed to large organi!ed players
C .ost large companies are gradually moving from unions to large organied players since they areexpected to address to governance issues in a scientiic and transparent manner# Furthermore,large players may $e a$le to provide solutions across locations where small players with their
localied reach may not $e of
much help#
:# Operational issues and compliance
C .anaging la$or, operational issues and compliance with the la$or (cts often re%uires liaisingwith local authorities# Darge organiations may not necessarily have the wherewithal andrelationships to manage such issues# Darge organied players would not only o?er themlexi$ility of sourcing wor"force in time, $ut also ensure compliance to la$or laws includinggratuity, minimum wages, >F, etc# /hese factors have compelled companies to opt for thetemporary stafing model#
)oing forward, a change in the la$or law will see companies increasingly adopting thetemporary sta? model and also witness a gradual shift from unorganied to organied
temporary sta?#I
1 Run K Pradstreet report, http7UUwww.cci.inUpdfUsurveysZreportsUit4ites4sector#pdfhttp7UUen#wi"ipedia#orgUwi"iUPusinessZprocessZoutsourcingZinZ ndia,
2 >rimary discussion,
http://en.wikipedia.org/wiki/Business_process_outsourcing_in_http://en.wikipedia.org/wiki/Business_process_outsourcing_in_http://en.wikipedia.org/wiki/Business_process_outsourcing_in_http://en.wikipedia.org/wiki/Business_process_outsourcing_in_ -
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: RF' report on education and training, January 200=#
21 Human resources solutions in
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(decco ac%uired (5in"ya in F60- to
enter the $lue collar stafing space#1C Plue collar stafing have high volumes and
margins
/eam Dease ac%uired J/ in F610 toenter the vocational training space#2
/raining is the starting point fordeveloping a temporary wor"4force# ( company with training facilities has an edge in terms of an employment4ready
Clixir, though its partner ), hasentered the temporary recruitment segment#
C
C( large player in recruitment and
search planning is also planning to enter the temporary recruitment segment#
*ecruitment4focused companies areentering the temporary recruitment segment to $uild a healthy top line# ( large $alance sheet ma"es them attractiv
C'andyRate 5o$s has ac%uired Steels, which provides temporary sta? to steel companies#:
331 "merging ey trends
Darge
international
players
entering$lue
collarsta&ng
Sta&ng
companies
entering
into
vocational
training
>ermanent
recruitment
focused
irmsentering
temporary
recruitment
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neral sta&ng companies are entering other services such as vocational trainingd compliance services as an extension of their sta&ng $usiness, while players in the permanent recruitment
1 http7UUwww#adecco#co#inUen4)PUmedia4relationsU>ress*eleasesU>agesU(deccota"esinorganicroutetoenter$luecollartempingspaceinndia#aspx,
10 Recem$er 2011
2 http7UUwww#teamlease#comUindex#php[module\wavesKevent\viewKid\1
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31 6ritical success factors
"xhi#it @: 6ritical success factors
/rac" record ofdelivery
8#0
9#0
8#0
:#0
2#0
1#0
4
etwor" ofclientrelationships
8#:
2#=
*ange ofserviceso?ered
Vuality of salesteam
8#1
:#8 'ost ofservicesdelivered
:#;
(ccess totalent
data$ases
8#8
>an ndia presence
Source7 ndustry estimate
6ritical factors for the success of temporary recruitment companies
1# Pan+India presence
Having a pan4ndia presence is of prime importance for sta&ng companies, since clients
prefer to have access to local manpower to meet their general sta&ng re%uirements#Sta&ng companies have o&ces in industrial $elts or service industry4intensive cities to
$e close to their clients, to understand their needs, and in close proximity to local
wor"ers to $e a$le to source the right sta? in time#
2# 5et&or of client relationships
Bhile sta&ng, companies outsource part of their activities to temporary sta?, and
therefore, wor" closely with their associate leased and sta&ng companies# Since the
contract is long term in nature, $uilding on trust to source wor" is important# /hereafter,
maintaining strong ties with the company is of e%ual importance to retain $usiness#
:# 9uality of sales team
/emporary recruitment is a relationship4driven $usiness, and therefore, re%uires %uality
sales teams to source
mandates, which are of long term in nature, from companies#.oreover, having associates with the re%uired s"ill sets to perform the given tas"s is
critical for their success#
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1;O is evolving rapidly, o?shoring in ndia has $een relatively
slow to ta"e o?# /here are very few home$red companies that prominent in this space
lixir Be$ Solutions, .aFoi 'onsultants and >eople Strong3# Several other *>Os are
extensions of recruitment agencies that o?er their services to prevent *>O fromhaving a canni$aliing e?ect on their recruitment $usiness# *>O contracts generally extend
for six months to a year, unli"e recruitment, which is $ased on successful referral, and it is
an annuity# However, most recruitment companies do not have the wherewithal to support
the large4scale nature of such contracts and glo$al clientele#
.ost of the recent newsma"ers in the ndian *>O space are glo$al players that are setting
up or expanding their ndian delivery $ase# Some of these include (lexander .ann
Solutions, which has tied up with (P' 'onsultants, and elly Services, which is launching
its *>O services in the country#
Darge international players have entered the ndian mar"et as they are of the view that small
and medium4sied companies will increase their outsourcing of non4core activities# .oreover,
with the mar"et $ecoming increasingly more competitive, large players are also expected to
$egin outsourcing to reduce costs and increase their e&ciency#
/he *>O $usiness is complex, technology4intensive, has the longest sales cycle and is li"ean annuity as contracts are generally for six months to a year#I
Mid-sized company
Outsourcing recruitment processes for a sector, e#g#, P>O, which faces attrition of almost90@;0+, can help companies in the P>O sector su$stantially save costs and focus onother issues such as retention#I
Mid-sized company
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O as a service o?ering has not yet evolved signiicantly in ndia, $ut consultants expect companies to adoptHuman resources solutions industry 2;
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ayroll $eing a complex and noncore activity, companies generally outsource it# /he space is dominated $y l
nline 5o$ portals are successful for sourcing resumes at the 5unior level, where %uic" turnaround time is of
Payroll processing and compliance
>ayroll outsourcing largely involves analysis of organiational data, computation of gross
salaries, /RS, allowances, reim$ursements of expenses and iling of /RS#
Organiations have the option to esta$lish their payroll systems, $ut it is time4consuming and
re%uires expertise# ncreasing wor"loads, strategic roles gaining in importance, low costs and the
enhanced %uality of outsourcing is driving organiations to outsource their processes# (ccording
to a survey conducted $y the Society for Human *esource .anagement, 8=+ 1 of organiations
are outsourcing their payroll processes due to their increasing headcount#
/his space is dominated $y large esta$lished players such as Hewitt and .afoi and small players
ind it di&cult to enter the space, since not all of them provide end4to4end solutions and last4mile
compliance, which is an extremely important factor# Furthermore, organiations are not
comforta$le sharing sensitive information with less esta$lished and "nown players#
'ontracts in payroll outsourcing are generally o?ered for ixed fees in the range of *100@
*1902 per employee# Some of the "ey success factors in any payroll agreement include
technology, security, last mile compliance, $usiness continuity and we$4ena$led %uery4handling
capa$ilities#
Online Bo# portals
/hese are 5o$ sites that list 5o$s according to di?erent classiications and post 5o$ re%uirements for
a position to $e illed#/hrough a 5o$ we$site, an employee can locate and ill out a 5o$ application,
su$mit resumes on a data$ase, which is accessed $y recruitment consultants for any 5o$ opening
that has not $een advertied#
au"ri, .onster, Head Honchos, and /imes Jo$s are some of the large online 5o$ portal players#
/hey earn revenues in the form of fees for every successful referral# Online 5o$ portals face sti?
competition from recruitment agencies and
internal referrals#
Darge recruitment companies such as (P' 'onsultants, .ichael >age and ito have launched
their own 5o$ portals to have a presence across the value chain, increase their margins and
esta$lish their $rands#
"mployment training
Reined $y high value corporate training to upgrade the s"ills of employees and ma"e them productive from
the time they
come on $oard#
(lthough corporate organiations are realiing the $eneits of training, they cut down on their
training spend signiicantly during a downturn# /raining contracts with the private sector are not
long term in nature in nature and revenues earned are non4stic"y#I
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1 http7UUpayroll#nau"rihu$#comUcompensationUpayroll4outsourcingU2 ndustry estimate
2< Human resources solutions industry
http://payroll.naukrihub.com/compensation/payroll-outsourcing/http://payroll.naukrihub.com/compensation/payroll-outsourcing/ -
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9# /he road ahead
Human resources solutions industry 2-
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The HR solution industry
/he H* solutions industry is highly competitive and is poised for enormous growth in the
next 10 years as companies increase their investment in their H* infrastructure#
'hanging mar"et dynamics and glo$al competitive pressures has resulted in $usiness
$ecoming more complex# /his has made companies realie the importance of getting the
right candidates to underta"e complex tas"s and outsourcing non4core activities# 'ompanies
that were earlier reluctant to engage external vendors now consider H* consultants their
partners in achieving their organiational growth strategy#
/earch
/he search mar"et, which evolved in the late 2000s, is expected to continue growing on
the $ac" of the expansion and entry plans of large domestic and international companies
into new sectors and geographies#
Recruitment
*ecruitment is expected to evolve from a fragmented ecosystem to players adopting ways
to wor" closely with
clients! re%uirements, where resume pushersI who do not add
signiicant value to their clients3 will eventually get marginalied# *ecruitment companies
are li"ely to move away from sourcing relevant candidates to accessing the right ones $y
using psychometric and other ro$ust tests to shortlist them#
Temporary stafing
/emporary sta&ng, one of the leading H* trends today, is expected to increase its
penetration signiicantly, given the current uncertain economic conditions# 'ompanies and
captive units are li"ely to increasingly depend on agencies to lease them with the re%uired
manpower in time, to meet sudden demand from clients#
Other segments
Organiations are fast realiing the $eneits of outsourcing non4core activities and focusing on
enhanced value4 added activities# Outsourcing non4core activities ena$les H* professionals
to move away from routine administration to a more strategic role# (s a result, the num$er
of companies outsourcing H* activities is expected to continue to rise and the scope of
outsourced H* activities to expand#
/he H* solutions industry is seems poised for interesting timesT with 11 deals in the last
three years, the overall sector is expected to "eep innovating and evolving toward
exponential growth
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2= Human resources solutions industry
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;# (ppendi
Human resources solutions industry :0
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/otal organiedwor"force in
>rivate sector sharein organised wor"force
Organised privatesector wor"force
\F610 mn3 7 :8#91F611 mn37 :;#11
MF610 mn3 7 ::+1F611 mn3 7 ::+1
F610 mn37 11#2F611 mn3 7 11#
201 >eopleStrong Summit H* ndia *ecruitment .K(
201 Dumis >artners >eopleStrong *ecruitment and H* >
201 .anpower BR' >rofessional sta&ng .K(
201 "ya .agna >rofessional sta&ng .K(
201 /eam Dease J/ Jo$ training .K(
201 *andstad .afoi *ecruitment and sta&ng .K(
200 "ya 'oachieve *ecruitment .K(
200 ((( entures >eople Strong *ecruitment and H* >
200 )a5a 'apital /eam Dease *ecruitment >
200 (decco (5in"ya )eneral sta&ng A $lue .K(
200 > "ya *ecruitment and sta&ng >
200 "ya (von .anagement Facility management .K(200 Hat >in >lc xecutive (ccess ndia3
*ecruitment .K(
200 .anpower (P' 'onsultants *ecruitment .K(
200 (decco >eopleone *ecruitment .K(
200 edior .afoi *ecruitment and sta&ng .K(
Source7 mergermaret.com, http7UUdealcurry.comUsearch#htm[search\Re$erry+20entures,12 Recem$er 2011,http7UUwww.indiaprwire.comU pressreleaseUmining4metalsU2011080;-2-8;#htm, 19 Recem$er 2011,http7UUwww.peoplestrong.comUnewsZpr#htmLprZac%uisitionZhrZfrontline,1; Recem$er 2011, http7UUwww.peoplestrong.comUnewsZpr#htmLprZprivateZe%uityZfund, http7UUdealcurry#comU20110814.anpower4Puys4
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(c%uires4/ech4Sta&ng4Firm4.agna4For4*s41004'r#htm, http7UUwww.alacrastore.comUmergers4ac%uisitionsU.anpower)roup4101088eopleZOneZ'onsulting4:;80920, < January 2012
Human resources solutions industry :8
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rnst K 6oung >vt# Dtd#
(ssurance ^ /ax ^ /ransactions ^ (dvisory
($out rnst K 6oung
rnst K 6oung is a glo$al leader in
assurance, tax, transaction and advisoryservices# Borldwide, our 192,000 peopleare united $y our shared values and anunwavering commitment to %uality# Be
ma"e a
di?erence $y helping our people,our clients and our wider communitiesachieve their potential#
rnst K 6oung refers to the glo$al
organiation of mem$er &rms of rnst K6oung )lo$al Dimited, each of which is aseparate legal entity# rnst K 6oung )lo$alDimited, a company limited $y guarantee,
does not provide services to clients# Formore information a$out our organiation,please visitwww #e y#c om#
rnst K 6oung >vt# Dtd# is one of the ndian client serving
mem$er &rms of 6). Dimited# For more information a$outour organiation, please visit www #e y#c omUindia
rnst K 6oung >vt# Dtd# is a company registered under the'ompanies (ct, 1=9; having its registered o_ce at 22
'amac Street, :rd Floor, Ploc" ', ol"ata 4 vt# Dtd#
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