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Executive search firms make e-commerce hiring a priority

As e-commerce companies such as Flipkart, Amazon India and Snapdeal become sought-after employers because of the rapid growth in their business a number of premier headhunters are expanding their e-commerce practices.Premium
As e-commerce companies such as Flipkart, Amazon India and Snapdeal become sought-after employers because of the rapid growth in their business a number of premier headhunters are expanding their e-commerce practices.

With many e-commerce firms expanding rapidly after recent fundraising, top headhunters such as Egon Zehnder are increasingly focusing on them

Mumbai/Bengaluru: Top executive search firms like Egon Zehnder International Inc., Russell Reynolds Associates Inc., Spencer Stuart, Michael Page International Plc, and Heidrick and Struggles International Inc. have helped fill corner offices at some of India’s top firms, including most recently Vishal Sikka, who was placed as the chief executive of Infosys Ltd by Egon Zehnder. Now, as the action shifts towards the e-commerce firms, many of whom are expanding rapidly after recent rounds of fundraising, search firms are making a beeline to win hiring mandates from them.

Until recently, e-commerce companies and start-ups mostly used smaller, boutique search firms such as LongHouse Strategic Consulting Pvt. Ltd, Anzy Careers Pvt. Ltd and Head Hunters India for hiring a majority of both senior talent as well as rank and file employees. Among the premier headhunting firms only Korn/Ferry International has had a dedicated practice for e-commerce and start-ups since 2012.

But as e-commerce companies such as Flipkart, Amazon India and Snapdeal become sought-after employers because of the rapid growth in their business, lucrative stock options and large bank balances which are allowing for high salaries, a number of other premier headhunters are expanding their e-commerce practices.

Since several e-commerce companies and start-ups have matured, it has emerged as big space, and Egon Zehnder is now putting more time and focus in this practice, said Pallavi Kathuria, consultant with Egon Zehnder. More than half of Egon Zehnder’s technology consultants are now active in the e-commerce and broader digital space, said Kathuria.

Hiring mandates from e-commerce firms rose by three times in 2014 compared with 2013, according to Vikram Chhachhi, principal at Heidrick and Struggles’s Mumbai office and a member of the global consumer markets practice.

To meet this increased demand, the firm has expanded consumer and technology team and has three dedicated consultants for e-commerce, he said.

Russell Reynolds declined to comment, while Spencer Stuart did not disclose details of their plans. A spokesperson for Michael Page said the firm is adding two more people to look at e-commerce, from the current four.

While e-commerce is not a big revenue generator today for these top firms, they expect it to grow exponentially. “It will become a key revenue generator in the next 6-12 months, when we should be doing about 15 senior-level searches in the course of the year," said Chhachhi of Heidrick and Struggles.

Though Egon Zehnder, Heidrick and Struggles and others have started to increase their footprint, Korn/Ferry has bagged some of the highest profile e-commerce hires this year.

Korn/Ferry helped hire Prakash Sangam, the chief executive officer at bus ticketing company redBus. Rajnish Baweja, Flipkart’s finance controller and Sanjay Baweja, the company’s chief financial officer, were also placed by Korn/Ferry, according to three people familiar with the placements.

“It is about the firm’s intention to invest for the future as opposed to simply milking the present. At Korn /Ferry, we bet on the growth of digital well over two years ago and invested time and effort to build expertise and networks in the sector," said Avdesh Mittal, regional sector leader (Asia-Pacific)for digital media at Korn/Ferry.

“This is now yielding results as we have completed a number of major mandates in this year and we’re well on course to do significant work in the next couple of years, both with the more established as well as up and coming companies," added Mittal.

One factor that is helping— and attracting—premium headhunters to e-commerce is the fact that these firms can now afford the hefty fee charge by top hiring firms. Investors pumped in more than $3 billion into India’s e-commerce firms in 2014, leaving them comfortably funded. Even, traditional brick and mortar retailers like Arvind Ltd, Future Group, Reliance Retail Ltd and the Aditya Birla Group are foraying into e-commerce, for which headhunters are helping hire top talent.

Apart from the biggest firms like Flipkart, Amazon India and Snapdeal, a few others such as online restaurant discovery service Zomato have also begun working with premium search firms.

“They have good quality of candidates as well as a good turnaround time. Our criteria is that they understand the pulse of the market and organization before we decide to associate with them," said Upasana Nath, chief recruitment officer with Zomato.

To be sure, smaller headhunting firms such as LongHouse and Anzy Careers continue to notch up higher placement volumes.

The likes of Korn/Ferry, Egon Zehnder, and Heidricks and Struggles, all of which focus only on hiring at the senior most levels, have done 5-10 hires a year on average for the last couple of years. LongHouse, in comparison, has already hired more than 60 executives this year at the vice-president level and above, said managing partner Anshuman Das. While LongHouse is the company’s brand for senior-level hiring, it has two other brands—CareerNet and HirePro, for rank and file and blue-collar hiring, which are also actively working with e-commerce firms.

Firms such as LongHouse and Anzy work under a pay per hire model compared with the top search firms, which work on a “retainer" basis.

Under the retainer model, headhunters get paid a significant chunk of their fees by their clients regardless of whether someone is hired or not. Once the mandate is given to these headhunters, a large part of their fee is guaranteed.

Depending on the salary of the executive hired, the fees charged by premium headhunting firms can range from an average of 50 lakh and exceed a crore. While the boutique firms charge less than half of what premium firms charge.

“I’m not sure whether this retainer model will be successful in e-commerce because the risks of an unsuccessful hire are high and a wrong hire can be very damaging for a start-up. Some of the global headhunting firms have been able to convince e-commerce companies to go on retainer but over time I won’t be surprised if some of these global headhunters will have to become more flexible," said LongHouse’s Das.

The other reason, most e-commerce companies go to boutique firms, is the time it takes to execute a search. E-commerce companies expect a faster completion on searches compared with companies in other sectors.

“We are nimble-footed and need very quick turnarounds. At leadership positions, the focus is on strong industry feedback and we look forward to our network so that we are assured of employees’ credibility. Premium firms generally take a bit longer for a search and we can’t afford to wait that long to fill a position," said Ashu Malhotra, head of human resources at Jabong.

The elite search firms realize that and while they are assigning more people to focus on e-commerce, many of them have stayed away from setting up a dedicated practice for e-commerce and start-ups.

“We’re not looking at setting up a separate practice for e-commerce as we currently see that the demand for talent is primarily from the FMCG and retail sectors," said Nicolas Dumoulin, regional director, Michael Page India.

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