HR companies with an appropriate descriptor are much in vogue these days. Some of the country’s first human talent supply chain firms started by reputed by renowned HR experts are coming up and also catering to the needs of larger organizations.
The country’s well chronicled talent crunch is reaching epic proportions. Alongside jobseekers, one of the biggest beneficiaries of the massive talent shortfall is the HR services and outsourcing business. In a matter of merely four years, HR services have become a $4-billion big industry spawning hundreds of start-ups such as Bhatia’s and attracting a horde of MNCs.
According to industry estimates, segments like staffing are doubling revenues with each passing year. To be sure, the HR Industry has itself undergone a sea change. From the handful of players in the business-that too dominated by recruitment companies. The market now has more than 20,000 players who operate in every part of the HR chain imaginable, from staffing strategy, to recruitment, technology, assessment and training.
One more new company called Aspire India is touted as a new B2B model where the start-up would supply clients with talent from the untapped reservoir of India’s non-metro towns after training them to meet specific job profiles and also provide sourcing software.
There are three key problems, talent crunch, wage inflation, and high attrition. Every big company will face these three problems and there was no answer to the problem in sight. So some entrepreneurs took up the challenge and started HR consultancy organizations.
At a time when talent is being touted as the most precious resource, companies are going all out to attract, retain and reward the coveted employees. That coupled with a 9 per cent GDP growth environment where companies are hiring more aggressively than ever before, has lead to a situation that is ripe for an explosion of a different kind of HR services.
The HR processes itself have become much more complex. Firstly, the general increase in movement of people in the economy, fuelled by the sustained high growth, has increased the sheer number of “transactions” in the HR system in any organization. Secondly, the increase in the competitive pressures has made the role of talent more crucial than ever before.
As a result, HR processes have to deliver a higher quality on a larger number with far less elbow room to fail. All these have made each process critical and the role of expertise in each process has, to that extent, gone up substantially. Three clear trends have emerged. Line managers are expecting more out of the HR department.
The HR function has also grown to manage project vendors. In some reputed organizations they even handle the core processes like mentoring and the assimilation and culture building programs in-house and outsource most of the others. This organization works with 35-40 vendors, not counting the one-off training sessions it conducts.
In high impact areas like top level searches, companies prefer to work with two or three partners, while for front end recruitment, it goes up to 25-30 vendors. With attrition rates in industries like BPO running at about 70 per cent, India has seen the highest salary growth in the Asia Pacific region for the last five years.
Also, companies like Infosys are adding nearly an equivalent of a Hindustan Unilever every year to their workforce. Every area of HR is under pressure because of the sheer growth in the number of people and the magnitude of problems. The ratio of HR professional to employee used to be 1:500 some years ago, and that has come to 1:100 but HR is still struggling to cope with so many demands being made in different areas.
HR processes themselves are getting more complicated and can’t be executed from within the company and there are several specialized service providers in the market. The more strategic functions are handled in-house and vendors are found for the rest.