The massive recruitment freeze and layoffs in most industries following an economic slowdown have taken a toll on executive search firms, who, until a few months ago, were much sought after both by companies as well as executives. ?Our clients have put all their positions on hold. Some were on the verge of closing big positions with salary packages of about Rs 1 crore per annum, but later they were put off,? said a principal consultant of an executive search firm on condition of anonymity.
Many search firms are experiencing shrinkage of fees by about 15% to 20%, as during such times, competition is intense with many companies offering services at lower rates. However, firms that are in consulting and training are less hit compared to executive search firms as corporates have not stopped training of employees though some of them have cut their training budget. ?The consulting business has been slightly impacted but we are receiving calls from progressive companies who think that this is the right time to train more employees,? said Ashish Arora, MD of HR Anexi, a consulting firm.
Experts say search and consulting firms which deal specifically in sectors like financial services, real estate, aviation and steel, among others, are taking a big hit on their businesses as these sectors are significantly impacted due to the slow down, whereas infrastructure, pharma and engineering are still doing well. In the current scenario, small and unorganised firms will suffer more than organised ones. There is also a possibility of some firms closing down or getting consolidated, say industry observers.
Says Tapash Sengupta, MD of CHR Global HR Consultancy, ?In recruitment, our revenue has dropped 15% this month and in consulting, two of our assignments have been put on hold till April 2009. But I?m positive that we?ll achieve our targets by December this year.? Getting new businesses and new clients is becoming very difficult as search firms are witnessing a hold on mandates which are given to them five to six months in advance. On the other hand, consulting firms are able to survive because of the variety of products they offer. ?In the current scenario, if our services are taking a hit, we will shift focus to our products and vice versa,? said RJ Heckman, president and CEO, Personnel Decision International.