As India Inc takes a prudent view of the economics of running a corporation, the axe is increasingly falling on rising recruitment costs.
Several companies are consciously making an effort to reduce dependence on recruitment firms and increase direct hiring i.e., through employee referrals and company portals.
At Perot Systems, for instance, close to 48 per cent of the company’s talent needs in the last three months has come from employee referral programmes, while it was only about 28 per cent earlier. “In the last three months, we have reduced consultant hiring from 32 per cent to 13 per cent of our needs,” says Dr Pallab Bandhyopadhyay, Vice-President and Head of HR for Asia Pacific, at the company.
If you take the economics of the recruitment process, direct sourcing would be the most cost-effective channel of getting new talent.
Generally, companies pay about Rs 25,000-50,000 as reward for every successful referral, while they would have to pay around 10-12 per cent of the hired person’s CTC to the recruitment firm.
With the salary of a project manager averaging around Rs 15 lakh, the company ends up paying almost three times more to a recruitment firm than they would to the referring employee.
At the Bangalore-based Intuit Technology Services Pvt Ltd, hiring through employee referrals is around 25 per cent of its total annual recruitment, while about 10 per cent comes through direct sourcing (company portal), 20 per cent through campuses and the rest through recruitment firms. “Ideally, there should be zero dependence on recruitment firms, but if you need niche skills in a short span of time, then you have to go one,” says the company Head of HR, U V G Sekar.
At EMC India Centre of Excellence, 35-40 per cent of the workforce comes through employee referral programmes.
According to R Vidyasagar, Senior Director, HR, EMC India COE, “Our sourcing strategy is gravitating more towards employee referrals, direct campus relationships and portals.”
written by: Anjali Prayag