Staffing companies benefiting from trend as employers turning to them for staff augmentation, says Quess CMD Ajit Isaac
Jay Shankar India’s hiring of software engineers has plummeted by 50% from the peak levels seen in the fiscal year ended March 2011, benefiting staffing companies such as Quess, said Ajit Isaac, chairman and managing director of the firm, which says it hires one employee every five minutes.
“I think the hiring of software engineers has come down by almost 50%,” Mr. Isaac said in an interview. “But the method of employment has moved to staff augmentation basis, which means if a company wants another 10,000 people, they would not want to hire them all on their rolls but would come to staffing companies like us and want to hire them. If a project runs between 6 and 12 months, an IT company will hire a team of 20-30 people. They go to the client’s site and work under the supervision of the IT company, set it up and go away,” he said.
“Previously the IT company would have hired all these people themselves and use them for repetitive projects. Now, project cycles are coming down and [due to] uncertainty of future finance they would take staffing companies like us.”
Quess, a BSE-listed company, has more than 2,61,700 employees on its rolls. The company, a step-down subsidiary of Fairfax Financial Holdings, has made 23 acquisitions in the past 10 years.
“Employment levels have come down, but staffing companies’ engagements have gone up. It is not the cost which is the driver here. It is the efficiency to find the people and convenience to manage the contracts and help the companies to concentrate on other technology issues and not take administrative responsibilities.”
“This year, we will hire 20% more, driven by staffing and facilities management.”
Mr. Isaac said the staffing industry was going through some “distinct” changes over the past five years. “One is in the infrastructure management space, where a lot of services have moved to the cloud. So, in-house management of storing and retrieving data has moved to the cloud and therefore that type of business has shrunk.
New area of IT
“Second is, a new area of IT has grown over the last few years in the areas of social media and analytics and Internet-related applications. An enterprise software has moved to the cloud and to large product companies. As a result, we need lesser people to make an application run, which is why employment levels in the industry have come down.”
The company’s main business is in people services where it operates in three segments. “We do staffing, we do training and development, and we do recruitment services. We have 1,70,000 people as employees.”
The second is infrastructure maintenance services, business process outsourcing services and insurance business. The third vertical is the industrial asset management, that looks at maintaining large equipment. It is also moving into the digital infrastructure space. “ And the last is the consumer business. In the consumer business, we have Internet…phone repair services… and a football club called East Bengal.” At a group level, the company has grown at a compound annual growth rate of 45%. One-third of it is inorganic and two-thirds of it is organic.
The Bengaluru-based company plans to focus on North America and Pacific-Rim nations but plans to acquire firms in Europe. “We want to add to the customer lifecycle management (CLM) space for sure., look at companies in the revenue cycle management space and healthcare space,” he said.
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