human resource solution industry

7/26/2019 Human Resource Solution Industry

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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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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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2: Human resources solutions industry


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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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Human resources solutions industry :0


57/64

/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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62/64


63/64

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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,

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