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Will outplacement click in the slowing Indian economy?

Will outplacement click in the slowing Indian economy?
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First Published: Tue, Jul 22 2008. 12 20 AM IST
Updated: Tue, Jul 22 2008. 12 20 AM IST
Bangalore: In these uncertain times, companies forced to lay off people are turning to outplacement firms to help their employees cope with the trauma, find other jobs and ease their transition to the next workplace, opening up a new revenue opportunity in the recruitment industry.
While Indian employers have used such services in the past, notably during the downturn of 2001, the outplacement sector appears to be expanding in line with the trend in the global recruitment industry.
Developed economies such as the US have devoted outplacement firms that specialize in easing employees out of a company by providing paid assistance in finding them new jobs. In India, the service has been performed in fits and spurts, even as an unpaid service based on personal relationships between human resource managers and recruiters.
That could change with the current global economic downturn and tech slowdown in India, making outplacement a revenue-generating model.
CareerNet Consulting, for example, said it did 400 outplacements over the last year alone; data for previous years was unavailable but the company said it was not as significant.
“Currently outplacement is done more as a goodwill gesture by recruiters for free. But there is a business model here and many companies have even offered to pay for this service,” explains Rishi Das, director at CareerNet Consulting.
Although hiring in India remains strong, there are signs of it not being as robust as years past; offers extended to graduates are being delayed, and a few companies such as Tata Consultancy Services Ltd and IBM India have laid off underperformers.
Technology sector recruiter TVA Infotech discussed outplacement as an opportunity in a recently held internal meeting.
“This is the best time to look at this concept as there is a market correction,” said Gautam Sinha, chief executive officer of TVA Infotech.
The US recession is having a direct influence on the Indian IT sector with companies looking to cut costs and people to make themselves more efficient.
Employers already using outplacement services range from telecommunications giant Motorola Inc.’s India arm and technology provider and consultancy Sapient Corp.’s India operations to start-ups shutting shop such as telecommunications company Aylus Networks India Pvt. Ltd.
It comes down to showing employees the “utmost respect,” said V. Ramachandran, senior director of human resources at Motorola India Pvt Ltd. “We have always believed that if we have to let people go because of a business downturn, they have to be able to walk out of Motorola (and their jobs) with their heads held high,” he said.
Motorola relied on outplacement in 2006 as it was closing down one division and eliminating 150 employees in the process. HR managers asked their employees if they wanted help finding work elsewhere.
Those who said yes were asked for their resumes and for their ideal companies. A job fair was held on Motorola’s campus with representatives from other companies and recruiters. Presentations and interviews followed. Those who cleared the interviews were placed with other firms.
In the US outplacement market, which was estimated to be as large as $1.8 billion as the dot-com bubble burst in the early 2000s, firms charge as much as 15-20% of a senior employee’s gross annual salary for this service. Outplacement in developed markets comes packaged with psychological counselling to help the employee come to terms with his or her new ”unemployed state”, career counselling, help in resume building and access to office equipment.
But there are nay-sayers. B.S Muthy, who heads a Bangalore-based search firm, Human Capital Consulting Pvt. Ltd, says: “Indian HR managers are too kanjoos (Hindi for miserly) for outplacement to click.”
According to him, the market is just not mature enough. Human Capital has done a negligible number of outplacements over the last year, he said.
John Quadros, director at Sampoorna Computer People, a search firm focused on the IT sector, said that there is so much overlap between networking and outplacement that it can’t even be distinguished. Still, in a country like India, where mass layoffs in industries such as information technology have been rare, outplacement could go a long way in public relations.
One 40-year-old former engineer at Aylus Networks said it makes a difference. He declined to be named but was among a group of 30 given the outplacement option. “I feel that my company took care of me,” he said. “Not many companies do this.”
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First Published: Tue, Jul 22 2008. 12 20 AM IST