HR industry grows at 21% over 4 years: Executive Recruiters Association and E&Y report

BANGALORE: The human resource industry in India has grown at a compounded annual growth rate of 21% over the past four years and is pegged to be around Rs 22,800 crore, according to a report by Executive Recruiters Association and Ernst & Young. As the industry gets more organised, new players, emerging sectors and multinationals are dropping anchor, and a changing mindset in traditional companies makes space for HR firms rather than referrals for hiring, it adds.

The 'Human Resource Industry Solutions Report 2012' indicates a maturing industry which is moving from being fragmented to getting more organised. The industry has players that are segregated into recruitment , temporary staffing and executive search. HR consultants' image has moved many notches up from being a vendor to that of a partner who plays a key role in the company's growth trajectory , says the report.

While the permanent recruitment in India is estimated at Rs 3,000 crore, the search industry is pegged to have a market size of Rs 600 crore to Rs 700 crore. The search sector gets its boost from foreign players entering Indian markets and expanding into different geographies and industries. Companies that deal with the automobile, luxury , agricultural and food business that have entered India in the past few years have used search firms to expand further.

"The Indian economic, social and cultural landscape is in the middle of unprecedented change. The need for solutions for complex problems of growth, innovation, and professionalisation is driving the opportunity for the HR solutions industry in a way that has never been seen before," says Amit Zutshi, Partner in Ernst & Young's Transaction Advisory Services practice. Temporary hiring has a 73% market share while permanent staffing has 13% of the pie, says the report.

The temporary recruitment industry is expected to be at around Rs 17,200 crore in which professional staffing accounts for Rs 5,300 crore and general staffing is at Rs 11,900 crore. Firms that are into professional staffing have a margin as high as 30% to 35%. Temporary staffing globally is at $140 billion but on the domestic front, with more companies leasing out job requirements, 2.5% to 3% of the workforce is expected to be on contracts in India in the near future.