New tie-ups, fresh acquisitions are rocking HR companies

Pankaj Bansal is always busy, but this year he is particularly stressed for time. The co-founder and CEO of recruitment company PeopleStrong is not only responding to an increase in demand for talent from clients but is also scouting the market for potential acquisitions. "We wish to acquire a midsized, board-run firm that has competence in the search space and has about 150 people," says Bansal.

Indeed, like Bansal, most of the recruitment industry is priming itself for growth this year and has plans to scale up. The opportunities in the Indian job market clearly have not gone unnoticed, leading to a considerable churn. The temporary staffing industry in the country alone is worth about Rs 20,000 crore, according to estimates by Ernst & Young.

In February this year, a Japanese group acquired a majority stake in Indian search and staffing firm Alp Consulting for Rs 30 crore. The reason for the deal was clear. India is a growing market and Japanese companies are deepening their presence here. "Staffing firms are sought by companies even in a downturn when they do not want to increase their own employee strength and overheads, but prefer to move light by contracting, temporary employees from staffing companies or even when they need to offload their employees to such firms without sacking them," says Moorthy K. Uppaluri, CEO, Randstad India & Sri Lanka, a unit of the Dutch multinational human resource (HR) consulting firm.

The buyout of Alp Consulting came close on the heels of Thomas Cook acquiring a majority stake in staffing firm Ikya Human Capital Solutions for a reported Rs 256 crore last year. That is not all. Even firms focused on leadership talent are flexing their muscle. Japanese HR service provider Recruit Holdings has acquired the domestic team of executive search firms NuGrid Consulting, Stanton Chase India franchise and Orane Consultants last year for Rs 150 crore. All these companies were promoted by R. Suresh who is now the Managing Director of RGF India, a subsidiary of Recruit Holdings. Suresh is bullish about RGF India's growth prospects. "Globally, we (Recruit Holdings) are among top two in leadership search and despite the time lost in reorganisation last year, we are growing at a very brisk clip," he says.

One of the top global executive search firms, Stanton Chase International, has reentered India through a partnership with ABC Consultants. ABC's division under the banner of Chairman's High Circle - spearheaded by B.P. Agrawal, the firm's consultant and Executive Chairman - will cease to exist.

Agrawal will bring in a fresh team for relaunching Stanton Chase International in India. "We will clearly need a new team of partners and B.P. Agrawal will continue to drive that business independently," says Shiv Agrawal, MD, ABC Consultants. Shilputsi Consultants, another executive search firm, is also looking to expand. "We are evaluating several small sets ups that need a significantly larger brand and ecosystem that we provide," says Purvi Sheth, CEO, Shilputsi Consultants.

There are others in the queue, exploring both organic and inorganic growth opportunities. European executive search firm Alexander Hughes is looking to grow its geographical presence here. Maurice Rozet, Chairman of the Board and President at Alexander Hughes, was in India recently.

"We are keen to expand our presence here and feel that with our multi-national presence and consequent expertise in aiding companies with a diverse board is much needed by companies here," he says. With Indian companies growing globally, they need a board and leadership that can grapple with compliance and governance issues in other parts of the world, Rozet adds. Alexander Hughes has actually been eager to make acquisitions in India, but has had to drop its plans.

"We just could not find firms with a verifiable track record," says Pankaj Dutt, Managing Partner, Alexander Hughes India. Indeed, this is a common refrain from potential talent search consultants keen to grow through acquisitions in India.

Rozet is not alone in visiting India in search of growth. Recently, InterSearch - another top global executive search firm - held its impressed by the opportunity. "We are looking to uncover talent not just for the Indian market but also for the global markets as today leaders are border agnostic," says Peter Waite, Member of the InterSearch Worldwide Standards and Quality Committee.

Christine Greybe, President, DHR International, was also here this year and along with recently appointed India Chairman, Deepak Gupta, reaffirms the company's aggressive plans for India. "We are open to inorganic growth through acquisitions," she says.

Clearly, there is a churn in the Indian recruitment market. "We scripted early such moves here, and the market periodically sees such consolidation," says Moorthy of Randstand. The year 2013 was one of the worst years for jobseekers in India. With Indian and global recruitment companies scaling up in the country, things may just change in 2014.