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Hiring slump and faking the hiring market! Staffing firms unnerved...GCCs getting real with temp staffing, shedding million dollar tech leaders in India GCCs

 Anil Ethanur; Brilliant takes. 100% agree with you on the scenario around recruiters, recruiting firms and the mainstream GCCs and IT Services firms.

I have been hiring for 5 SaaS products with global markets in Life Sciences tech, in my previous assignment with a 3500 people firm with multiple offices in India and the US, EU, etc.
2021, in market onboarding ~600. Attrition during the same time ~600. This kept 25 recruiters at various levels busy. Down to May/June 2022, the slump started to hit, client's enthusiasm to buy projects retracted and continued so and in OND of 2022, nearly all IT services, even product and SaaS firms started feeling the recession but no one dared say a word. 25 recruiters had foot on the gas but all those million interviews were not producing offers for simple reason; recession in the US, a clear case of being in denial mode! Companies with garrison full of internal recruiters continued to spend time in silence...decent firms, didn't lay off recruiters, despite almost no hiring happening and to top it up attrition rates plunged too...
Silently, recruiters started feeling anxious, got no raise, lot many put on PIPs and many got Silent Layoffs.
Recruiting market that I have friends into, expected Q2 to rebound the low life hiring sentiments but that didn't happen they say. Rather they all agreed and as you also mentioned Anil, the temp staffing has picked-up and Perm remain subdued! Interestingly even the GCCs in turn of events as market sentiments drive, have focused all on temp staffing in recent months. This is what you also observed. Just exchanging my notes here Anil :)
Question is: What happens if recession looms larger and deeper, as some market pundits predicted it to stretch it till Mar-Apr 2025.
Not just lateral hiring, but even the campus hiring has borne the brunt in 2023 and 2024. Many thousands of those engineers offered in 2022 are still waiting for onboarding dates. Infosys CEO assures them again this week. Wipro sent them termination/regret letters, on one or other pretext. IITs have seen nearly 30% unplaced..
Where are we headed?
Every staffing company will have a different story to tell about its performance last year or this year, depending on which pond it is fishing in!

While the $16 billion staffing industry enjoyed the 2021 boom and has weathered the 22/23 slowdown, double-digit growth is still possible in the current fiscal year.

Let's see if the below pointers make sense...

-The market share of large players is still in single digits for any macro shock to impact their growth. In fact, large listed players have shown growth in their general staffing business
-Empirical data suggest that the staffing industry grows at 2-2.5x of the GDP growth rate.
-The domestic consumption story is still intact, which means there are opportunities for Executive Search, Direct hire, and Staffing segments across sectors such as retail, e-commerce, real estate, beauty and wellness, travel/hospitality, etc.
- The OND quarter, which is the festival season, happens to be the best time for temp staffing
- 40+ New GCCs established in India in the last 12 months; this translates to an average of 500 FTE hiring and at least 10-15 Leadershiring per GCC.
-Hyderabad saw more greenfield GCCs last year
-Top 120 GCCs in terms of headcounts have an entry-level attrition of 30% plus
-IT Services attrition is still at 12% plus, and the replacement hiring for skilled tech workers is still on
-The BFSI segment, especially banks, has an entry-level attrition in the range of 30-50% plus, depending on the organisation

The challenges for staffing companies would be...

1) Presence in GCC Segments
2) Relationships with Enterprises that are hiring
3) Expertise in Industries that are continuously hiring (GCC, Healthcare, Banking)
4) Geographical presence in relevant geographies (Hyderabad, GIFT City)
5) Reduced agency spending by organisations and more onus on Internal TA
6) Pauce or reduction in Full Time Hiring by enterprises
7) Enterprises onboarded lesser talent suppliers due to decreased demand?

The staffing industry has been long enough to adjust the sails for the boom and bear hiring markets.

We always ask this question: are you fishing in the right pond?

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