SEGMENTS OF THE HUMAN RESOURCE INDUSTRY

Karan Saini2nd June 2015

Structure of the HR IndustryHR Services

Permanent Recruitment

Executive Search

Recruitment

Temporary Recruitment

Professional Staffing

General Staffing

Other Services

RPO

Payroll Processing

Training and Development

Performance Management

Permanent Recruitment

Estimated to be in the range of INR28-INR31 billion1

Can be divided into Executive Search and Recruitment

Four Step Process – Sourcing, Screening, Selection and On-boarding

Top 3 Success Factors – Network of Client Relationships, Track Record and Efficient Sales Team

Growth Drivers – Booming Economy and Focus on HR Function

Challenges – High Attrition and Online Portals

Executive Search

Niche category focused on hiring of CXO-Level Posts

Fee in the range of 25%-30% of the Annual Cost-to-Company Salary

Key Players – Egon Zehnder, Heidrick & Strugglers, Russel Reynolds, Spencer Stuart and Amrop

Trends – Large MNCs requiring CXO Level, Family Conglomerates shifting to search from referrals

Recruitment

For Middle and Junior Level Posts Fee of 12%-16% for Middle Level and 7%-

10% for Junior Level with the latter having a high volume

Key Players – ABC Consultants and Mafoi (Indian); Micheal Page and Kelly (MNCs)

Trends – Recruitment Firms providing RPO Offering, ABC Consultants started a joint venture with Alexander Mann, Elixir and PeopleStrong new entrants

Temporary Recruitment/Staffing

Estimated to be an INR172 billion market1

Temporary Staffing is usually required in sectors which are cyclical in nature and require frequent adjustment of Staffing Levels

Can be divided on the basis of skill into Professional Staffing and General Stuffing

Top 3 Success Factors – Pan-India Presence, Client Network and Sales Team

Growth Drivers – Shift to Temp due to uncertain economic condition

Challenges – Loss of lease employees to client company

Processional Staffing

Essentially for Engineering and IT Sectors High margin of 30%-35% due to high

skilled nature Key Players – Team Lease, Manpower,

Adecco, Mafoi and Kelly plus several other small firms

Trends – Manpower and Ikya, both Recruitment and General Staffing firms, recently acquired WDC and Magna respectively, to enter the Professional Staffing; Prof. Staffing firms entering Vocational Service domain

General Staffing

Divided into White Collar(ITeS, Retail, Telecom Sector) and Blue Collar(Factories, Plants)

White Collar jobs have salaries of INR10,000 to INR13,000 pm and fees are 7%-10%

Blue Collar jobs have salaries of INR5,000 to INR8,000 pm and fees are 15%-18% along with high volume

Key Players – Adecco, Manpower, Team Lease, Futurz along with labour unions

Trends – Change in Labour laws incentivising shift to organised general staffing, Addeco(MNC) acquired Ajinkya(Indian) in FY08

Recruitment Process Outsourcing (RPO)

Provider acts as a company’s internal recruitment function for its recruitment activities, e.g. sourcing of the right candidates, screening candidates, selection of candidates, and on-boarding and training.

Usually extend from 6 months to 1 year and is an annuity

Nascent stage in India with offerings from Elixir, Mafoi and PeopleStrong

Many recruitment agencies offering RPOs so as to prevent cannibalising effect of RPOs over the market e.g. ABC Consultants joint venture with Alecander Mann

Payroll Processing and Compliance

Takes over the functions of Analysis of Organisational Data, Computation of Gross Salaries, Computation and filing of TDS, Reimbursement of Expenses, etc

A growing trend in the market due to the difficulty experiences while establishing own payroll system

Charge of INR100-INR150 per employee Key Players – Hewitt and Mafoi

Other Services

Training and Development- Gamification of the process being the trend as it

leads to a 2-way process Shift to Capability Development and Continuous

Learning Usage of Tech in the form of Mobile and Social

learning on the rise Performance Management-

HR Software like Oracle, SAP, Workday and ADP used

Easy to use end-to-end talent management platforms preferred

References

1. Human Resources Solutions Industry Research Report, Ernst and Young India

2. Predictions for 2014 Research Report, Bersin by Deloitte

3. Global Human Capital Trends 2014, Deloitte