As the hiring environment improves and professionals start hopping jobs once again, Info Edge, one of India?s largest internet companies, is getting ready to up the ante. Not that it had ever stopped spending on its businesses. Indeed, as Sanjeev Bikhchandani, says, it was the fact that Info Edge did continue to invest, where rivals did not, that helped it sustain market share and stay ahead of the competition.
?We scaled back much less than the others did,? says the 46-year-old founder and CEO. Indeed, Citigroup Global Market believes that Info Edge has strengthened its leading position in India?s online recruitment services landscape, emerging more dominant from the economic downturn when competitors like Monster India have scaled back investments.
Almost 80% of the firm?s revenues come from recruitment services, and with the economy now firmly on the growth path, the management says hiring is on the rise. The Naukri JobSpeak Index (an indicator of hiring intent) and the number of daily resume modifications vouch for that. In the three months to March 2010, InfoEdge reported a 10% sequential growth in recruitment, after five dull quarters. Apart from Naukri.com, a job portal, Info Edge also owns Naukri Gulf?marking its foray into the Middle East market. That aside, Info Edge has been running Jeevansathi.com, a matrimonial portal, 99acres.com , a real estate portal, Shiksha.com, an education portal, and Quadrangle, an offline executive search firm.
After a rough year, Bikhchandani is breathing a lot easier. ?We are working on innovation and propose to increase our advertising spends,? he confirms. Info Edge recently rolled out a new product?Naukri Confidential?which would allow senior executives to upload their resumes without revealing their identities; the company would invite only those it wants to use the product.
What?s giving the company the confidence to invest more is the growth in revenues in the March 2010 quarter, which, Bikhchandani says, was driven partly by the increase in traffic share from 47% about one-and-a-half years ago to 60%. Although the company?s net profit fell 4% to Rs 13.2 crore, mainly impacted by exceptional costs relating to investments, Info Edge returned to positive revenue growth in the quarter to March 2010 with a 13% rise in sales to Rs 65.3 crore.
Info Edge, of course, depends heavily on the IT vertical but the good news is that tech majors are hiring more furiously than they have been in a long time. Nevertheless, it will be a while before IT majors start recruiting at the pre-meltdown pace, and, therefore, as Citigroup points out, Info Edge?s revenues in the near term should be driven mainly by non-IT verticals.
However, experts believe that over the longer term, hiring is expected to improve to an extent where Naukri can grow revenues at 25-30% every year on a sustainable basis. Experts also believe that along with growth, brand building is equally important and a portal needs to ensure its visitors stream. Says Milan Sheth, an Ernst&Young partner, ?The brand is perhaps the only pull in the online world. Many of us pay per minute to use the Internet, so we tend to visit the top sites,? he adds.
Other verticals such as jeevansathi.com, which has a market share much below market leader shaadi.com, and 99acres should also be able to grow much faster from their smaller revenue base. The matrimonial business grew revenues by 17% year-on-year while 99acres reported a growth of 39%, thanks to some revival in demand in the real estate sector. However, losses in subsidiary companies continue, though the non-recruitment losses during the quarter were down 40% sequentially to Rs 2.4 crore, thanks to better traction in 99acres.com and shiksha.com.
According to Bikhchandani, Jeevansathi is doing well in the northern and western parts and is actually the market leader in some pockets. ?We are strong with certain communities in states like Maharashtra? he says.
The bigger point industry experts make is that businesses like Info Edge?s may not grow too fast given that Internet penetration in the country is still low at just 7%, although it?s grown from 1.3% in 2003. Developing countries such as China boast of a higher penetration of 29%. Developed markets like South Korea, of course, are way ahead at close to 80%. However, the absolute numbers in the Indian market, at 50 million Internet users, still make for an attractive addressable market. Also, according to a JuxtConsult report, searching for jobs is one of the most popular online activities for India?s Internet users, with 71% users conducting job searches. That must be sweet music to Bikhchandani?s ears.