Tech staffing consultancies brace for tough days

Shruti Sabharwal & Anirvan Ghosh
BANGALORE

IF IT/ITES companies are feeling the heat of the US slowdown, recruitment companies for the sector appear more than scorched. Though the severity of the impact has been mainly felt by companies in entry-level staffing with some seeing a whopping 60% fall in earnings, mid-level staffing firms are fearing the worst in the days to come.

“Earnings for recruitment consultants have definitely slumped over the last six months. The impact on earning from key accounts has dropped by 60% with further impacts on the pricing front,” said TeamLease Services’ vice-president of permanent staffing, Sampath Shetty. “For some individual consultants, the income is down to zero,” he added. This, he says, is the case with those who had all their clients in sectors that have borne the brunt of the recession. Working on a very low client base, some consultants have seen their incomes almost wiped out.

Typically, a small firm with 10-15 people and working in entry-level staffing earns around Rs 15 lakh per month where employees work on a low-fixed, high-commission salary. A 60% fall on such a base could, in some cases, even be life threatening.

For every placement, the consultant gets an average commission of 8% of the total annual income of the person placed. Entry-level salaries in the ITeS sector range from Rs 1-2 lakh. That’s not all. IT companies are trying to make their money stretch more as they look for higher value from recruitment agencies. “With the metrics for hiring moving away from quantity to quality with prescribed non-negotiable cost to company for candidates, these expectations are marginalising the recruitment companies’ productivity and pushing for more value adds at similar pricing,” Mr Shetty added.