New Delhi: Till the other day, I was scanning scores of resumes of people looking for jobs. Now, I am sending out my own.”
The speaker is a 30-year-old who, until two months ago, was working for the Indian arm of a Zurich-based staffing services firm he would rather not have named. He himself didn’t want to be identified out of fear that it would affect his ability to land a new job.
He isn’t alone. As companies slow or freeze their hiring activity against the backdrop of an economic slowdown, hiring and staffing services firms are seeing a fall in business and many are taking the logical way out by downsizing their own operations. To be sure, there are a lot of people out there looking for jobs, but with few companies hiring, there are none going and recruiters don’t make money by catering to job seekers.
This particular piece of writing has been on the wall since the second half of 2008, when the Indian economy began to slow. A December-January survey of 480 Indian firms by consultant Hewitt Associates Llc. found that almost 37% had instituted a freeze on hiring. The former executive at the Swiss firm said he and several of his colleagues were asked to go after business started to slow. “The firm has released some people based purely on cost considerations,” he said.
Mint couldn’t arrive at an estimate of the number of recruiters who have lost jobs in the past six months, but executives at at least a dozen staffing and hiring firms say that the slowdown has hit their business bad.
“I know of at least 40-50 recruiters who are out looking for jobs,” said Gauri Sarin, president at Approach Talent Solutions Pvt. Ltd, a search firm. “The actual number of unemployed recruiters will be a lot more.”
Executives at staffing services firms such as Manpower Services India Pvt. Ltd, TeamLease Services Pvt. Ltd and Adecco India, the Indian arm of Adecco SA, confirmed that their companies are feeling the pressure of fewer job additions and hiring freeze. They did not want to be identified citing company policy that prohibits them from speaking to the media on behalf of their firm.
“Many companies—selection, staffing or search firms, have cut headcount by 20-25%,” said Pramod Thilakan, associate director at Executive Recruiters Association (ERA), an industry body.
The slowdown has also meant the end for several small search and staffing firms. “A number of very small firms have got wiped out in this slowdown,” said Thilakan. According to ERA, there were around 28,000 firms that paid service tax in the recruitment services category in 2007. “Of these, about 5,000 firms make up for the 80% of the recruitment industry’s revenues, while rest are small mom-and-pop firms,” he added.
Weakening demand in recruitment has also led to a drop in salaries. “The recruitment space has seen an overall salary correction of 20% across the board,” said Ashutosh Khanna, partner and head (consumer practice) at search firm Korn/Ferry International in India. For instance, a recruiter with 10-12 years of experience who was hired at Rs20 lakh a year earlier, is now likely to get around Rs16 lakh a year, said E. Balaji, chief executive of Chennai-based Ma Foi Management Consultants Ltd.
And executives in the business say salaries of senior recruiters have seen sharper falls than those of recruiters at other levels.
“Recruitment is one business that is directly impacted by hiring or lack of hiring,” said Marcel R. Parker, chairman of Ikya Human Capital Solutions Pvt. Ltd, a staffing services firm. “Everyone, big or small, is feeling the heat, albeit in varying degrees.”
Ikya has seen a 15-20% dip in overall revenues and Ma Foi by 12-15%. But they’re still better off than the industry as a whole.
“We expect a 40% dip in the revenues of the recruitment industry in 2008-09,” said Thilakan. In 2007-08, the total revenue of the recruitment industry rose to Rs13,000 crore from Rs8,500 crore in 2006-07, Parker added.
That performance could explain why ERA’s members met in Goa this year for their annual meeting. The venue was Pattaya, Thailand last year.