Are Staffing companies still in vogue?
That was the first question a renowned VC asked us when we met him after we quit our last employment. It’s not that we hadn’t asked ourselves this question before; it is perhaps an instinctive decision that our next venture is a Staffing company. Trust us, we spent hours validating our decision on the how, but there was never a question of what are we doing next.
Industry Reflection – The Indian Staffing Market
Though globally, Staffing/HR Consulting is a 70-year strong industry, in India it has been evolving over the last 2 decades – in fact the industry is still in its nascent stage here! The country has rapidly moved to the 13th largest Staffing market in the world, and all this, without any legacy or labour reforms. For a country which is adding 12 million people to its workforce every year, this global pecking order can change rapidly. At a $6 Billion market size, India has only 2.2 million declared tripartite staff; one crore people change jobs every year making it a significant Direct Hire market. Shorter tenures leading to higher attrition has demanded organisations to focus on engagement and productivity i.e. a high-performing workforce, which means talent acquisition is getting more outsourced and the market is growing at 20%, with potential to grow even more.
The government has brought in various changes that supports a surge in a more formalised workforce, and a change in culture that favours the current generation, as well as the forthcoming one. Corporate tenures are reducing while shorter assignments are here to stay, and the workforce would prefer quality work than a lifetime of employment. Corporates too are moving towards having a said percentage of their workforce on a flexible or outsourced mode. All these factors work to the advantage of Staffing and Recruiting as a business model.
We spend majority of our time on our smartphones, but when it comes to our careers we seek out more guidance and assurance than what the blue screens tell us. In the 12 steps illustrated above, while there are a few things that can be automated, however it is still a high touch game. There are tools – both existing and emerging – which manage parts of this cycle. Artificial Intelligence and Machine Learning will solve parts of mapping, sourcing and matching issues, and there are tools which have made assessments and interviews digital. Remarkable Human Resource Management Systems & Payroll tools have made Employment compliance easier, made newer technology available for employee engagement, and added to this, upskilling is making the cycle more effective. However, there isn’t a single technology which weaves everything together – it’s far too complex.
But we can simplify it.
This is perhaps why Staffing as an essential utility cannot be managed through a single button. The button comes through as an integrated service from the Staffing company. It’s important that the Staffing provider is a Strategic Talent Partner. One that has the necessary ecosystem experience, skilled leadership, and the right relationship and service orientation towards its extended workforce.
In each of the steps of talent acquisition and talent management, the technology is changing every day. As Xpheno, we have spent substantial time talking to our prospective customers, and it has become increasingly apparent that employers want the ‘right talent’ – they have little interest in the technology deployed to get them. As Staffing & Recruitment specialists, Xpheno can integrate the best technology with human expertise, as our know-how would be best utilised to integrate top technology solutions and enable organisations with the right talent.
The $6 Billion market has only 14 companies which have crossed 200 crore annual turnovers. 8 of them are MNCs, two Indian companies have gone the IPO way, and all these 14 companies have had 20% plus topline growth over the last 3 years. The MNCs mostly serve their global clientele in India and the large players have less than 40% market share. About 10 international Staffing companies who have over a billion-dollar turnover haven’t entered India yet, and only a few large Asian and European firms have made representative entries. What’s interesting to note is that there isn’t a single pure-play specialist staffing company, so there is a huge piece of the pie that’s up for grabs.
The next 10 years would take the Indian Staffing industry to about $20 billion. There is an opportunity for few billion-dollar companies to emerge from India. Many new MNC Staffing companies will enter either organically or, like in the past, inorganically. In an aging world, India’s diverse and large-scale talent has a huge role to play.
We are betting our money on the Staffing Industry through Xpheno, and we are certain many more will join us!
Anil & Kamal