Online Recruitment Sector

THE INDIAN ONLINE RECRUITMENT SECTOR

1. What is Recruitment?
Recruitment is the process of finding and attracting capable applicants for employment. The process begins when new recruits are sought and ends when their applications are submitted. The result is a pool of applications from which new employees are selected.

Figure: Recruitment Channels

2. E-Recruitment Revolution
The buzzword and the latest trends in recruitment is the “E-Recruitment”. Also known as “Online recruitment”, it is the use of technology or the web based tools to assist the recruitment process. Online recruitment and the use of new emerging technologies have many advantages for the modern recruiter. It makes the process of finding candidates and new business opportunities quicker, cheaper and more efficient. The one drawback, however, is that online recruitment can appear to be a daunting subject.
There is growing evidence that organisations are using Internet technology and the World Wide Web as a platform for recruiting and testing candidates. The IES survey of 50 organisations using e-recruitment reported that the primary drivers behind the decisions to pursue e-recruitment were to:
• improve corporate image and profile
• reduce recruitment costs
• reduce administrative burden
• employ better tools for the recruitment team.
Fifty-five per cent of respondents expected their organisation to reduce its use of other recruitment methods in the future. The key limiting factors to e-recruitment most frequently reported were:
• the cultural approach of the organisation towards recruitment
• the lack of knowledge of e-recruitment within the HR community
• Internet usage by target candidates
• Commitment of senior management.

Figure: The e-Recruitment Landscape (Source IES)
Issues raised as causing concern with e-recruitment included the quantity and quality of candidates applying using web-based tools (eg organisations being inundated with CVs attached by email, many of whom were not suitable for the post), the relevance of shortlisting criteria (eg the validity and legality of searching by keywords), confidentiality and data protection, and ensuring diversity of applicants.
The trends in e-recruitment use suggest a changing landscape whereby in future the candidate is connected to the central system and there is involvement of the line manager in the process (see figure). In addition to the reported benefits such as cost efficiencies, the role of HR in this model is viewed as more of a facilitative role, in theory allowing time for recruiters to become involved in the strategic issues within resourcing.

3. The E-Recruitment Sector
While the Indian recruitment industry is still reeling from the impacts of the US slowdown (in terms of cost cutting measures induced by the companies), one significant area which has actually witnessed a growth in such a conflicting situation is the e-recruitment market. Growing at a pace of about 100 to 150 per cent, this recruitment mode promises to increase its share from the present 2 per cent to 10 per cent in the next 3-4 years. The Internet, in fact, has completely revolutionized the role of the traditional recruiter. Gone are the days where cold calling and candidate networking were the only option available to identify new potential candidates. Now it's about searching through hundreds of thousands of CV's placed on personal web pages and browsing online corporate staff directories. In a candidate-starved (quality candidate) market, the Internet can prove a valuable resource for finding potential candidates who are not necessarily looking to change their current jobs but would be open to the 'right' opportunity. Meanwhile in a candidate rich marketplace, we can use the Internet to find relevant 'live' job vacancies where companies have advertised directly on the web. You can also use the Internet to find information on company's financial results, their budget information, who has been recently appointed, and business wins & losses. In fact, with the right search techniques, you can normally find exactly what you are looking for.

Presently, the total Indian recruitment market is approximately around Rs 500- 600Crores. The decade old online recruitment industry in India seems to be flooded with different jobsites, each of them promising a better job to candidates and better candidates to employers. The Indian market for e-recruitment is still at least five years behind the West”. This shows in the big numbers. According to industry estimates, the top four or five job portals account for only 1.5 to 2 per cent of total recruitments.
Internationally, online recruitment is almost neck-to-neck with other recruiting channels. In the US, for instance, the online recruitment market already accounts for 29 per cent of total recruitment related advertising.

4. Jobsites-The Concept
The online recruitment revolution started in India in 1997 with the launch of naukri.com which changed the entire platform for job seekers and employers. A typical job site offers a dynamic candidate database to employers apart from standard web-based advertising solutions (which include simple text based listings/classifieds to dynamic banners and animated pages). Online recruitment facilitates just-in-time hiring.

Figure: Resume Database Sizes of India’s Major Job Sites
When an organization needs a candidate it can access the database of job portals, screen resumes and send a mass mail. It can also shortlist people based on skills, location, salary and availability and move on to the interview stage. Some of the jobsites in India include naukri.com, monsterindia.com, timesjobs.com, clickjobs.com, shine.com, cybermediadice.com, jobstreet.com etc

5. Direct & Indirect Competition
Initially the most evident direct competition was only the job supplement of newspapers. Placement consultants although considered a threat by both newspapers and job portals were in fact consumers of both these solutions at some point or the other.

Direct Competitors Indirect Competitors
www.naukri.com
Times Ascent (Times Job Supplement)
www.timesjobs.com
DH Avenues (Deccan Herald)
www.monsterindia.com
Opportunities (The Hindu)
www.jobstreet.co.in
www.linkedin.com

www.clickjobs.com
SMS Advertising
www.shine.com


Newer methods of recruitment like mobile SMS advertising, Radio jingles and billboard advertising were some of the upcoming modes which were posing a threat to e-recruitment portals. An upcoming social networking site name LinkedIn was creating disruptive innovation by offering a combination of features offered by Facebook/Orkut and those offered by job portals. Moreover it is available free of cost to employers at the moment.

6. E-Recruitment-Objectives
The objective of a job portal is two pronged - First, to provide an avenue for a prospective job seeker with the most relevant and appropriate job opportunities. The more such opportunities that the job portal gives, the better it would be for the job seeker and the job portal themselves.

Second, to provide corporate employers with a large number of profiles in its database, which have good number of quality resumes in terms of work experience and skills sets as sought by the corporate.

And if these quality resumes are of actively job seeking individuals, that is when the employers, who actually make revenue for the job portals, will get benefited. If the job portals can increase an employer's or a head hunter's efficiencies in sourcing and selection of candidates for their current requirements, then one of the primary business objective is met.

So there are two questions that a job portal needs to answer. First question that needs to be answered is - do the job portals really add value to the job seeker? And the second question is - do the job portals increase the hiring efficiency and effectiveness of an employer.

But how many jobsites will actually survive? What is it that makes a job portal stand apart? Newspapers also provide job supplements. And there are plenty of such job supplements thriving and getting good revenues for the newspapers. Will this principle hold good even for jobsites?


7. Newspapers’ Success
Different newspapers lead various markets across India. For example, if The Times of India leads in Bangalore then The Hindu perhaps sells better in Chennai. Moreover, there are many regional newspapers which have better market penetration in the interiors of the country. This is primarily because of better local news coverage.

Hence, any vacancy advertisement has to be advertised in multiple newspapers for wider reach. Advertising in different newspapers across regions gives employers unique responses. Also, in India, advertising in newspapers is still considered to be a better brand-building exercise.


8. Factors affecting the Online Market
a) Cost of advertising in newspapers: Many employers have switched to online recruitment as it is cheaper and cost-effective. If the cost of advertising in newspapers reduces, it will hit the online recruitment business
b) Hiring plans of employers: If there is a reduction in hiring budgets, it will hurt the online recruitment business more, as compared to newspapers, as these portals are vertical (focused only on recruitment)
c) Placement Consultants: Although, majority of the consultants use job sites as one of the media for sourcing profiles, mid/senior level candidates are better sourced through networking, paper advertisements and referrals. This is exactly what the top-notch consultants do. Since the online candidate database is available to anyone who subscribes to it, mid/senior level candidates are skeptical to register on job-sites.
d) Vernacular Languages: Companies looking out for candidates from Tier II/III cities and interior belts advertise in the regional newspapers in the local language. Advertisements in local language can generate much better responses in these places. However, the job sites accept advertisements/resumes in English language only.
e) Client Satisfaction: Reduction in time and cost of recruiting
f) Growth of Internet: Increase in market penetration will definitely increase the number of visitors on jobsites thus leading to growth of the e-recruitment market.
g) R & D: Increased technological advancements combined with newer features being offered by jobsites could give e-recruitment a better edge over other modes.

9. Jobsite-Differentiating Factors
A job site is accessible on the web from across the globe. This makes advertising on multiple websites redundant. Since registration on a job site is free, job-seekers may register on all sites. They may also respond to advertisements on all sites. But the job-seekers may be the same. So it does not make business sense for employers to advertise on multiple sites to get the same response.

So, how are the job sites surviving? Not all job sites are doing well. But the top sites are uniquely positioned and offer unique advantages to employers. Hence, employers are willing to spend on multiple sites. For example, timesjobs.com is the undisputed leader in conducting job fairs across the length and breadth of the country. Participants include leading IT/ITES companies looking out for entry/junior/mid level candidates. Of late, companies from other sectors are also keenly looking at job fair as an option for recruitment. Clearly, timesjobs.com has an edge over others as it draws support from its in-house partners like print (Times of India/Economic Times/Bangalore Mirror etc), radio (Radio Mirchi), Televison (Zoom, Times NOW) and the horizontal portal Indiatimes.com In addition, the resumes sourced through the job fairs may also be available to online subscribers thus giving access to unique profiles.

Monster.com is a multinational company operating in multiple countries across the globe. Employers hiring candidates from abroad typically look at monster as it offers various combined packages giving access to candidates from multiple countries. For example: If an IT company in India wants to hire a specialist available only in Europe, it makes sense to sign up with Monster rather than Naukri as Naukri is not well-known in Europe.

Naukri.com, being the first-mover in the Indian online recruitment space, has been a dominant player in the core online services.

Industry experts feel the reason for the growing popularity is change in perception of the recruitment site from just being a job board to a resume manager to a market analyst. A market study of past six months show that not only has there been an increase in terms of specialized solutions and services, but also a lot of stress is now being given on R&D and providing of customized and personalized services, which gives them a fast mover advantage.
There has been a paradigm shift in the hiring process through online recruitment. In particular, accessing profiles from any corner of the globe, real-time communication and online automated assessment. Online corporate recruitment features include video profiles, virtual office tours, online presentations and interactive tests. These value-additions enable a firm to make a benchmarked peer comparison on a one-on-one basis and understand a prospective candidate’s suitability for a job. It has also increased the visibility for candidates on the options available in the market and reduced the recruitment cost drastically while improving the turnaround time.
Advantages
• Much faster than traditional modes of recruitment
• Access an dynamic pool of resumes
• Automated short-listing process cuts down hiring time by over 65%
• E-recruitment is experiencing phenomenal growth, according to the Recruitment Confidence Index (RCI) e-recruitment special. Almost 50% of employers now go on-line to fill their vacancies – nearly three times the number who used the internet three years ago.
• Newspaper advertisements may have worked to find top talent in the past but Internet recruitment sites are where the skilled individuals of the present and future are looking for jobs.
• Gaining occasional candidates for free by ensuring the e-recruitment website is easily found from the front page of the corporate website
• E-recruitment can produce cashable savings.
• Retaining speculative and star candidates for the future, and then contacting them when an appropriate vacancy is advertised effectively generating applicants for free.
• Reduced Administration
• Allows line managers to view applications online and seamless transfer of candidate information to employee records.
• Time becomes an issue and you need to minimize time-to-hire or else face the risk of losing good candidates to competitors.
• Reach a wide/niche pool of applicants
• Offer access to vacancies 24 hours a day, 7 days a week reaching a global audience
• Help handle high volume job applications in a consistent way
• Provide more tailored information to the post and organization.



Some Facts
• 96% of all companies will use the Internet for their recruitment needs.
• In the U.S., some companies claim 30% of new hires are from the Internet and 77% of Internet users who are seeking a change, use the Net to do so.
• A recent survey conducted by Employment Management Association, U.S.A, the cost -per-hire of print Ads was estimated at $3295 and Online Ads, a mere $ 377
10. Type of Market
The Indian e-recruitment sector took birth with the advent of Naukri.com-India’s first online job site. This was sometime in 1997. Naukri had the first mover advantage until Jobsahead entered the scene sometime later. Before the entry of Jobashead, Naukri was virtually a monopoly. Of course since the concept was new the cost of introduction was higher. Once the product gained acceptance with both the corporate as well as job seekers Naukri started commanding a premium for its e-recruitment solutions. Sales representatives would charge a price higher than that listed. Naukri even resorted to exorbitant price increases almost every six months to literally “milk the cash cow”.

Jobashead did bring in some amount of competition, threat and challenge to Naukri but later on an informal cartel structure developed with neither player willing to cut prices. Further, innovation in technology was easily imitated by the other since there was minimal capital expenditure required. Monster, a multinational player in the e-recruitment sector entered the Indian market quite some time later. Monster acquired Jobsahead and posed a big challenge to Naukri using the “power of 2” advertising. This was the beginning of the consolidation stage in the Indian e-recruitment sector and of course it took place too early as the market was very nascent at that point in time.


Figure: E-recruitment Market Structure at Different Stages of Evolution


With the thumping success of Naukri many small and big players entered the market assuming there is space for each player. Players like Timesjobs.com (Times of India Group), Shine.com (Hindustan Times Group), Jobstreet.com, ClickJobs.com (Bharat Matrimony Group), Cybermediadice.com (Joint Venture between Cybermedia Publications, India and Dice, USA) and Itpeople.com made hurried entry into the sector. Cybermediadice.com and Itpeople.com tried focusing on only IT related jobs. However, most of the players used similar kinds of technologies and databases. So what mattered more in this sector was brand recall and advertising strategies. Naukri is the Hindi word for job and hence had the Indian touch. Monster fared well because of its multinational image whereas Timesjobs dominated several niches. Itpeople.com went out of business whereas Jobstreet.com turned to selling recruitment software. Cybermediadice.com was later acquired by Timesjobs.com.

MONOPOLY DUOPOLY PERFECT COMPETITION OLIGOPOLY
Naukri Naukri/
JobsAhead Naukri/Monster/JobStreet
/CybermediaDice/Clickjobs
/Itpeople/Timesjobs Naukri/Monster/Timejobs
Figure: Players in Different Stages of Market Evolution

Overall, the recruitment market is showing tendencies of oligopolistic competition. The competition is mostly on non-price. But, within the industry, timesjobs.com has created a niche for itself in the job fair segment and is a clear monopoly. Naukri and Monster continue to dominate the online recruitment segment with Monster having a better footing over Multinational Companies based out of western/European countries. Entry and exit from the market is easy. There are hundreds of other smaller players who keep entering and leaving the market.

Substitutes
1. Print Advertisements
2. Targeted Mailers
3. Targeted SMS Advertising
Complements
1. Job Fairs: Periodic job fairs held by Job Fair “Specialists” Timesjobs.com has seen a spurt in the number of new resume registrations on their website. This shows that the resume database offered by Timesjobs.com and their Job Fairs are complementary goods.

Figure: Timesjobs.com Job Fair Advertisement
2. Job Listings: These are simple job advertisements posted on the job sites as and when vacancies arise within an organization. These listing direct viewers to a registration form which captures the resume details before the applicant can send his profile to the prospective employer.

Figure: Naukri.com Job Listings Screen Shot

The list of substitutes and complements has been periodically changing depending on innovations brought in by existing players or new entrants. For example, a decade ago the only indirect competition to e-recruitment was the print media. But with newer technologies becoming popular print media is not expected to be a big threat in future. Some of the listed substitutes were actually developed as complements. For example SMS facility was initially used by Naukri to send out job alerts to relevant job seekers. But now employers are finding it more economical to directly send out SMS alerts by tying up with a mobile service provider. Same is the case with email. This also exposes the job opening to a wider passive job seeking audience as compared to the active job seeker base registered on the job sites.
But over a period of time this fine distinction is slowly vanishing with some of these options working as a substitute and much better as part of an integrated recruitment package. For example a Job Fair requires online and offline advertising supported by Radio Announcements, SMS Alerts, Print Communication etc. Selecting only a few of these may bring down the footfalls at the fair.

11. Entry & Exit
It is impossible for any new entrant to grab a market share as the success of any job portal depends upon both employers and job seekers. While the former are customers the latter is the








reason for existence of customers. It illustrated in the figure above. More jobseekers viewing a site lead to an increase in traffic which in turn encourages employers to spend on advertising on that site. When there are more job advertisements on the site it leads to an increase in the number of job seekers viewing the site.


Hence a new firm may find it difficult to enter the circle. The group (employers or job seekers) to be approached first becomes a difficult question to answer. If employers are approached first, the number of candidates’ resumes available for display in the database would be meager as compared to existing players. On the other hand, if advertisements are not available on site, job seekers will not be motivated to register. Naukri started off with listing free advertisements initially. This led to an increase in traffic which in turn generated revenues. But Naukri had the first-mover advantage. Employers were willing to try a new concept to fill in their ever growing human resource requirements. Jobseekers were also regularly visiting the site to check out new advertisements. A strong web-based product combined with an aggressive sales team & advertisements gave Naukri the much needed edge. But with the entry of so many job portals, can advertising and sales techniques give the same results. Far from it.


Figure: Percentage of Global Visitors (Source: Alexa.com)

So what is the solution? Innovation. Innovation is the name of the game. Times jobs not only conceptualized job fairs but also started off the print-online combination advertisements thus driving newspaper readers (read :traffic) to the online site. This helped them in building a sizeable database within a short span. They introduced the concept of both ground (offline-conducted on a particular day at a specified venue: employers meet prospective candidates [jobseekers] and conduct on-the-spot interviews) as well as Virtual (online) job fairs. The concept of a virtual job fair was very interesting. Paper advertisements were released notifying the openings. This would attract job-seekers who do not visit any/the jobsite often. In order to apply the job seeker is required to logon to the site. This would increase the traffic as well as add resumes to the database. Further, a new visitor might get interested and start browsing regularly.


Other new start-up ventures did try out a few new concepts but all did not pick up because of various reasons-right from budgetary constraints to inappropriate strategies. For example, a common complaint from employers was that there were too many junk or non-updated resumes available on any portal. So an innovation came through with a job site doing a check on the validity of the contact details of the job seeker on a regular basis. Others tried the idea of having jobseekers send copies of their academic and professional credentials so as give greater credibility to the resume. Yet another possible innovation doing rounds is the pay-per-click concept for job listings rather than a fixed cost per advertisement or package.

Such similar innovations are great differentiators and stand a chance of not only diverting traffic from other sites but also creating new online visitors. There is no shortage of job-seekers. One should use the right techniques to attract the right people on site. Moreover attracting visitors cannot be a onetime affair. So it is also high time new entrants realized that the online recruitment business is not about trying to build a huge database of resumes. It is a volume game no doubt but the methodology of creating the volume is what makes the difference. Also, it is necessary that registered users come back regularly to update their details else the resumes are nothing better than dead fish.

Entry Cost
Entry costs can be classified into direct and indirect costs. Direct costs are the costs that are directly related to setting up the infrastructure for running a job portal business. This business primarily being operated online does not cost as much as conventional businesses. Some of the direct costs are only related to hardware and web development. Majority of the expenses are directed towards promoting the website and employing sales and back end staff.
Naukri being the first mover received substantial funding from venture capitalists. Entering an established market requires financial muscle which was proved by Times of India Group. Although, ClickJobs also received huge funding from Yahoo! it was unable to make a mark because of lack of innovation. Several hundred players enter this market considering only the direct perceivable costs. It is only later that they realize that a site with a back-end IT team will not be sufficient to manage the show.

Exit Cost
Exit costs are virtually absent except perhaps the statutory obligations towards employees. The site is allowed to die its natural death. Some players like Cybermedia Dice were acquired for their database which contained huge number of IT-related profiles.

12. Economic Implications of Exit
The economic implications of exit for an unsuccessful job site are enormous. The expenditure made on employees and depreciating assets are not recoverable. This means the salvage value will be less than the capital pumped in. If the business was started on credit then it is difficult to settle the outstanding payments. For a moderately successful venture the database can be a savior which may be acquired by a competitor for a sizeable amount.