Startup City Magazine

Overseas Recruitment Consulting Industry in India

By Bijay Sahoo, Group President – HR, Consumer, Telecom & Media Businesses, Reliance Industries

Bijay Sahoo, Group President – HR, Consumer, Telecom & Media Businesses, Reliance Industries

Overseas Indian workers enjoy a special role in Indian economy. There are around 12 million Indian citizens abroad who repatriated a remittance of USD 68.9 Billion in 2015 even after a drop of a billion dollars from the previous year due to the sharp fall in oil prices which hit the remittances from the middle east, a region which employs around half i.e. 6 million Indian workers. India is the highest recipient of remittance money globally. Without this forex remittance inflow, India’s balance of payment deficit would be out of control making our currency and economy vulnerable to external shocks. Also the overseas emigration at least partially reduces burden of employing India’s burgeoning young working age population growing at 2 million per month. Apart from stabilizing the economy, the remittance boosts domestic economy by way enhancing purchasing power of recipient households. 

The intermediaries who make all this happen are the overseas recruitment consultants. The overseas recruitment consultant performs 3 important functions:

1. Economic: Like any matching market intermediary, he needs to find a buyer in this case employer and worker thousands of miles apart.

2. Legal/Regulatory: As per India emigration act of 1983 a recruiting agent, as he is referred in the act, has to register himself/herself with Protector General of Emigrants (PGE) in the Ministry of External Affairs. Recruiting agent represents employer and manages all the legal paperwork. While the law allows overseas employers to register directly with PGE, the employers rarely use the provision given the perceived difficulty of dealing with bureaucracy.

3. Socio/Psychological: In overseas recruitment, there is a cultural gap, which creates trust deficit. Overseas Recruitment consultant reduces this anxiety by assuring both the parties. 

There are many unscrupulous agents as they are honest and professional ones. There are horror stories of the helping hand of an agent turned hostile as the hapless worker is caught in an alien land with all his documentation snatched away from him. We do need diligent enforcement of the existing legal protections for emigrant workers. However, tarnishing the entire industry for a few bad apples should be avoided.

The overseas recruitment industry has come a long way. The growth in the emigration of Indian workers can be ascertained from the skyrocketing of the remittance inflows from merely USD80 million in 1970s, USD 2.79 billion in 1980, USD 3.42 billion in 1991, $ 13 billion in 2000, USD 27 billion in 2007 and USD 68.9 billion in 2015. Also the industry has been getting more and more organized and professionalized. Until 1980s, the industry was dominated by unorganized small players. After the economic liberalization of 1990s, the arrival of global majors such as Manpower, Adecco, Randstad and Kelly services started in India. The next change which happened in 2000’s is the online job boards like Monster and subsequently social network like LinkedIn which has made global mobility for professionals relatively easy.

The future scope for the industry is huge but the industry will have to reinvent itself with times. Simple information arbitrage is gone. The consultants have to really become consultants, understand the client requirements, candidate requirements and facilitate the match. Demographics, technology, economics and regulatory changes will drive the opportunities and consultants need to be adept at identifying and seizing them. While oil rich gulf has previously absorbed majority of Indian emigrants, the era of low commodity prices will lead to stagnation in that market. On the other hand new markets such as ageing economies of Europe will have opportunities in areas such as healthcare, hospitality and other services.

Technology will play the biggest role in defining the demand for skills worldwide. Over 47 percent of the US jobs are about to be automated due to new disruptive technologies such as automation of knowledge work, robotics, 3D printing, Internet of Things etc.

Industry’s own dynamics is changing with the fading of online job boards and going beyond job search engines and social networks to AI/ Machine learning based smart algorithms for improving the match between the employee and the job/employer. In the next decade we might see emergence of an Uber like player in overseas recruitment industry.

Economic cycles affect overseas recruitment industry heavily. As we witnessed in 2008, the overseas workers become the first casualty of the economic downturn. Recruitment consultants need to have strategies to mitigate the shock of these cyclical fluctuations. For doing that, they need to diversify across industry and regions and develop capability to move talent to countercyclical industries.

Also, another Blue Ocean strategy for overseas recruitment industry is to vertically integrate backwards into the skill development area. While in India we have a workforce of 487 million, due to lack of skills, the employability of workers is limited within and certainly out of the country.  Out of the current Indian immigrants 60 percent are unskilled. Recruitment consultants have a golden opportunity to get into fixing the skill gap for overseas markets. Since they know the overseas markets and skill needs there better than anyone else, they should take lead in this.

Finally, immigration policy changes in India and recipient countries will impact the industry. Rising xenophobia in the west is an obstacle but it’s unsustainable in the long run due to demography. India’s own official policy on emigration has been all along to facilitate the labour mobility and not to promote it. There are signs that the current Indian government is moving towards the policy of promoting labour mobility e.g. India’s policy push towards bilateral labour mobility agreements like the one signed with Denmark will reduce the barriers and open new opportunities.

Talent migration accompanying value migration is inevitable. Ancient Indians cherished the ideas of one global family. While the contemporary world has too many walls to realise the ideal, the overseas recruitment consultants are the soldiers in the battlefield to dismantle or at least circumnavigate those walls!

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