On the job

Calcutta, Nov. 28: Here’s some good news for bosses who are tired of hiring employees after a long recruitment process and then seeing them quit within a year.

Summit HR Worldwide, a California-based $375-million recruitment company, will guarantee the minimum period of retention of an employee it is recommending.

In a study done by Summit with Indian Institute of Management, Bangalore, eight out of every 10 employers in India wanted innovation in their recruitment processes.

“We started servicing the Indian market 17 months ago and expect to garner 50 per cent of our business from India in the next two years,” said Ranjan Sinha, chairman and CEO, Summit HR Worldwide.

The company not only guarantees minimum retention of the employee but also frees the employer from hiring consultants, setting up selection boards and other recruitment tools. Summit HR will provide the whole gamut of services from talent attraction, sourcing, recruitment, attrition management and exit interviews.

If the employee recruited by Summit HR does not stay for the minimum stipulated period of one year, there is a penalty clause for Summit which varies between 2 to 16 per cent of the contract value.

The $700-million Indian job market is very fragmented with 14,000 recruitment companies in the market.

About 100 companies do business worth $300 million. Most of these companies have less than 15 employees but none assure any minimum retention period.

“The challenge is finding the right people with certain years of experience. The attrition varies across sectors from 20 per cent to 50 per cent,” Sinha said.

It is especially bad in the manufacturing sector (20 per cent) as companies invest a lot in training personnel which is also time intensive. The exit of such employees hurt the company much more, he added.

At present, the cost to recruit an employee with a cost to the company salary of Rs 4 lakh is between Rs 85,000 and Rs 90,000.

A consultant charges a fee of about Rs 50,000, while Summit’s charges would be Rs 63,000 to Rs 64,000, which have been growing at 50 per cent year-on-year.

The total cost is going up by 15 to 20 per cent each year.

Summit, in association with IIM Bangalore, has developed STAR, India’s first psychometric tool, which uses Indian data to analyse cases for recruitment.

If a prospective employee fails to turn up for an interview, then a company, on an average, loses Rs 20,000 that is spent on processing the CV, setting up the selection panel and making phone calls. It loses Rs 75,000 for an employee who leaves after a month and for every employee who leaves after two months or more, the damage is around Rs 2 lakh.

Summit has a database of 3.6 million professionals and is expected to announce tie-ups with mobile firms and banks in the coming months to share their databases.

By 2010, India is set to have 40 million manufacturing jobs, five million retail jobs and 500,000 technology jobs.

Teamlease, one of the largest staffing companies in India, feels that over a period of time not only minimum retention but even performance management will have a bearing on the recruiter consultant’s contract.

“We have a provision where we replace free of cost if the recruited employee leaves before a certain period of time or the company pays less,” said Sampat Shetty, vice-president, permanent staffing, Teamlease India.