Online recruitment start-up TalentPad decided to shut shop this month after being in business for barely 18 months. The start-up raised an undisclosed amount from Helion Venture Partners in 2014, acquired technology recruitment platform OptimizedBits and clocked more than $1 million in revenue in its lifetime, but it wasn’t quite enough to help it survive.
In June, Hyderabad Angels-backed WhistleTalk, a social referral platform for hiring, closed down as well.
TalentPad and WhistleTalk are among the at least 35 online ventures that include Hiree, HackerRank, Talview, LetsIntern and Belong, striving to make a dent in India’s $1-billion-a-year recruitment market with profuse use of technology in sourcing, screening and interviewing candidates.
These new-age firms claim to streamline the hiring process for recruiters with diligently crafted algorithms, tools and tests that throw up a set of handpicked candidates, presumably best fitted for the job, after perusing their social, professional and academic background.
The upside for recruiters: saving the labour of manually sifting through resumes and an efficient, technology-driven sourcing and screening of candidates.
For instance, Hiree allows only an active jobseeker to list on the portal, thus ensuring that recruiters do not spend time in connecting with disinterested candidates. HackerRank conducts hackathons and online tests for recruiters to screen candidates, while Talview offers solutions for conducting video interviews on the go.
In the process, these fledgling recruitment firms have locked horns with the so-called unicorns such as Naukri, Shine, LinkedIn and Monster, which are sitting on millions of resumes and tens of thousands of customers across industry segments, which is not the case with these start-ups yet.
“The online recruitment start-ups are trying to solve certain problems that job boards like us are not focused on, like selection and shortlisting,” said Amit Garg, executive director, digital at HT Media Ltd, which owns Shine.com and publishes Mint. “Many of these start-ups will scale up to be a decent business but they won’t give us a real fight unless they have as big a database, enough manpower and resources for driving sales and enough investment.”
Naukri claims to have about 60,000 corporate customers and about 40 million registered users, of whom about 18 million are active on the site at any given time.
In comparison, Hiree has partnered with 550 firms. HackerRank claims to have more than one million coders, though not all of them are job seekers.
Most have succeeded in wooing technology product firms and start-ups, which recruit mainly to fill niche roles. They are yet to sign up bulk recruiters in the banking, financial services and insurance, retail, information technology (IT) services and telecom segments, limiting their growth, a case in point being TalentPad.
“TalentPad’s algorithm was working very well for the technology product segment, but it was hard to scale the approach to other segments such as insurance, retail, financial services or BPO (business process outsourcing,” said Ritesh Banglani, partner at Helion Venture Partners. “It was a case of not finding a product market fit.”
Two of the most valuable homegrown start-ups, InMobi and Ola, employ about 900 and 6,000 people, respectively. In comparison, at IT services firm Infosys Ltd, the headcount increased by about 3,300 employees in the quarter ended June, while at Tata Consultancy Services Ltd, the number of new hirees was about 5,300.
Also, most of these recruitment start-ups target job seekers with two to five years’ work experience, catering mostly to the lateral hiring segment.
Naukri claims about one-third of the lateral hiring by large firms still happen through the portal even as the company is spending heavily on technology.
“We are investing serious money towards technology and to improve our product. About 30-40% of lateral hiring done by most large firms is via Naukri,” said Hitesh Oberoi, managing director and chief executive at Info Edge India Ltd, the company which owns Naukri.com.
“A better-looking site is not technology and technology cannot be a differentiator, it is only an enabler,” said Oberoi, adding that the company is also open to acquisitions.
Branching out to multiple industries thus becomes the key to survive in a highly competitive market. Else, the companies should choose a particular vertical and go global with the offering, experts say.
“Most hiring through these firms happens for junior and mid-junior level. But the base will not be small if they can expand beyond the product start-ups in the next two to three years to pharma, FMCG (fast-moving consumer goods) and banking,” said Rutvik Doshi, director at Inventus Capital Partners.
One challenge for the start-ups is that most bulk hirers are looking to outsource the entire recruitment process instead of particular functions. It also becomes difficult to standardize the recruitment process as every company wants to stick to its own set of assessment guidelines, said Helion’s Banglani.
Consequently, most of these start-ups are adding more firepower to their arsenal, offering additional services as well as expanding to categories beyond technology products companies.
According to Manjunath Talwar, founder and chief executive at Hiree, the company would expand to tap other categories such as manufacturing, banking, financial services and insurance, besides adding multiple layers of service such as assessment tools on top of the sourcing services.
Hiree and HackerRank have also adopted an annual subscription-based payment model to ensure a steady stream of revenue.
Zishaan Hayath, angel investor and co-founder of online prep platform Toppr.com, points out that there is a need for niche hiring platforms, but none of the newer recruitment platforms have been able to create a product that is solving the need of tech start-ups.
As a result, start-ups end up hiring from recruitment agents, employee referrals, and their own network.
“Recruitment start-ups here have not been able to crack the model completely. The conversions were low and the retention of the employees that came via these platforms was a challenge,” said Hayath. For him, campus recruitment and his own network are the best channels for sourcing talent.
(The story was first published on livemint.com)