|
|
|
|
 |
De-risking the staffing business |
|
|
The Hindu Business Line |
| |
December 24, 2007 |
Binu Jacob
Anyone would think that the staffing business has come in for a windfall. Consider this – most sectors in the economy are doing well, India is the largest destination for FIs, the stock markets have hit all-time highs – this paints a pretty picture for companies that provide support services to those that are riding the economic boom such as the tech firms, infrastructure giants and BPOs.
Among the companies that stand to gain from the scenario are the staffing firms. The country has seen unprecedented levels of job creation in the IT, infrastructure, ITeS and services sectors, besides the engineering/manufacturing companies. Though the jobs market is flush with opportunities, it is hamstrung by a shortfall of human capital.
According to Census reports, the employable population in India is getting younger and it would be safe to say that the divide between demand and supply would even out much sooner than that in other large economies such as the US, the UK and China.
Not surprisingly, search firms are making hay while India shines. There cannot be a better opportunity for a contingent staffing firm to make it big.
Given that search firms have it so good, it is of some dissonance that there is very little written on the business itself, though much has been said and written about the factors influencing the search business. One rarely comes across an article that delves into a business that primarily involves human capital. Strange is it not? Is it possible that a sector that has everything going for it have any problem areas. Arguably, it does, since it involves us Homo sapiens.
Let’s consider that human capital is the primary product of a firm that offers staffing services. But the product is not proprietory, does not belong to anyone, has a mind of its own, comes with a shelf life, cannot be controlled unless loyalties kick-in and that too for a limited period of time.
Every business activity is carried out for profit and calls for concerted efforts to make it a success. To ensure suitable outcomes involves a lot of planning and forecasting, allowing for variations that are subject to uncertainties, good and bad.
Staffing risk
In the staffing business the dynamism of the ‘product’ erodes the ability of businesses to predict realistic variations because of the (in)glorious uncertainties of engagement with “Homo sapiens”. Let’s refer to this as “Staffing Risk”.
In recruiting parlance, the ‘offer renege’ or ‘back-out’ was the exception a few years ago. However, it is the norm nowadays. The flip-side of a situation where there are too many jobs and few good people? Many would grudgingly admit to it but the fact remains that candidates have a lot to choose from and cannot be blamed for choosing the job that best suits them. It often leaves some poor consultant in the lurch since his candidate has backed out and neither he nor his client have anything to show for their efforts and time.
It would also be grossly unfair to heap the blame at the candidate’s door. Another significant contributor to the ‘risk’ is the client at the other end of the customer spectrum. A lethargic or apathetic client can be equally harmful in negating the efforts of staffing firms by prolonging the hiring cycle beyond acceptable norms. Even with proactive clients, uncertainty or internal recalibration of their businesses, puts the brake on the hiring process. Result – the RoI, in terms of the man-hours spent on such assignments, and opportunity cost take a serious beating.
Therefore, in the current ‘opportunity surplus’ scenario, the unpredictability in forecasting becomes an inhibiting factor. Leaders in the staffing space have an uphill task in projecting revenues consistently as their efforts to control variances are often rendered redundant because of ‘fickle-minded’ candidates or indifferent clients.
A grim picture but all is not lost for staffing businesses. Traditionally unorganised, the sector has seen a huge influx of professionals over the last decade — people who have actively contributed to the sector and gone some way to shedding its legacy of being rampant with fly-by-night operators who are in it for a quick buck. Notwithstanding the tagline of being a ‘risky if not the riskiest business,’ there are a lot of search firms new and old that have flourished and continue to do well despite the odds.
Aren’t they affected by the uncertainties of the business? Most of them are, but they have learnt to deal with them rather than go under. Professionally run firms try and offset the risks inherent with both ends of the customer spectrum. The new age staffing mantra is engagement — deep and wide. Greater interaction and engagement with candidates instils the ability in consultants to sense and weed out uncertainties, thereby, enabling them to forecast better closures. Progressive companies realise that candidates are no longer commodities that can be traded in the jobs market. They are younger, smarter and have greater access to opportunities than ever before.
Relationship continuity
The buzzword today is ‘relationship continuity.’ Retaining candidate interest is critical and good staffing firms realise that it is of paramount importance to invest time and effort in engaging with candidates pro-actively. You know you are on the right track if candidates treat you or your firm as ‘career advisors’ rather than just ‘job providers’ which is purely transactional and short-lived. The former state can be an investment which could pay-off in due course of time as good candidates often move on to influential positions and more often than not, contribute to client/business acquisitions. They also become part of the candidate network, so critical for staffing firms.
The criticality of managing client accounts well is a no-brainer. Given the nature of the business, appropriate client engagement assumes importance. Successful staffing firms are normally dependant on good account managers who are focused on customer/client sensitivity. Businesses often lose out on clients if they have the wrong person managing the accounts. Therefore, hiring the right person becomes the key.
Sustaining focus is elementary since the returns on RoI may be subject to the speed in turnarounds. Larger accounts tend to be slow since the hiring process would need the buy-in of multiple-stakeholders to bring it to closure. To lose patience and bale out is a common mistake. The closer the engagement, the greater is the traction. Account managers also need to be wise in choosing key accounts by maintaining a good mix of quick-moving, nimble accounts along with slow ones. There isn’t a perfect client and it would be a waste of time to look for one. Success is dictated by those who can sense the pulse of a client well and adopt the appropriate course of action quickly.
The staffing sector has arguably attained industry status today. There is a distinct semblance of order and professionalism though it still continues to be fragmented.
There is a crying need for common forums to represent the interest of like-minded and professionally-run search firms, share best and ethical practices, help influence policy on a national scale, enhance industry status and drive adoption among the mainstream. After all, we do affect lives.
The spate of acquisitions and mergers augur well for the industry. The key drivers would be to build lasting differentiators. (The writer is V-P, Ad Astra Consultants Pvt Ltd.) |
| | | |
 |
|
|
|
|
|
