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High View - HR Market
Milton Friedman said ''Business of business is business”. If this is true one could possibly question what makes
business of business successful? In other words, which factor of production – land, labor, capital, technology and
organization has an overarching effect on business and its long term success?
Arguably, labor (human capital) today is the most important factor of production, necessary for business continuity and
essential in creating long term competitive advantage - thus shareholder value.
Studies overtime highlight criticality of human capital in shaping the outlook of IEM, Engineering, Manufacturing,
Research, Life sciences and Consumer services industry. We eminently witness demand soaring across spectrum for
talent in knowledge economy. Organizations scramble for talent and invest significant time and resources in face
lifting their human capital index - fundamental to rise of HR market.
Being in HR consulting industry and leading a seasoned HR consulting firm in its adolescent prime, I learnt
organizations need of human capital is as dynamic and intricate as human aspirations are. Be it organization, industry
or economy the importance of human capital manifests in utilization rates, business growth or job market conditions
acting as barometer of optimism and industry growth.
Traditionally consulting firms have been reasonably proficient in providing necessary HR services to growing
organizations. Be it Selection, Staffing, Training, Payroll or Allied services; consulting firms are playing for
enhancing foot print and market leadership across services and geographies.
HR consulting today is no less than practicing an art form. It needs a bird's eye view of industry and emerging talent
landscape, ability to customize solutions for specific business needs and personalize service delivery effectively.
Success in HR consulting primarily lies in developing insightful perspectives of business demands and at least deliver
need based critical solutions in context of time.
Broadly if you analyze, the value pyramid of HR market is structured based on human capital needs of industry.
Acquiring and retaining talent are fundamental building blocks of HR market and rest is about managing
imperatives of cost, business demands, in house competency and associated risks of outsourcing HR services.
Therefore a way of creating economic value added (EVA).
Some of the trends explained below acted as drivers of growth for HR market:
1. Growth of HR market is directly related with industry’s openness to utilize HR consulting services. Growing
competition has forced organizations to proactively engage in strengthening Good Employer Proposition (GEP)
and be the employer of choice. At the same time, employee branding (EB) 'on brand behavior' is also
reviewed from time to time and articulated by organizations. Consulting firms are engaged more meaningfully
in structuring GEP and EB propositions as key strands of HR strategy.
2. Social media, e-commerce, open learning platforms and Smartphone culture undeniably influencing the HR
strategic framework in growing organizations. Endearing movements like crowd sourcing, entrepreneurship and
growing social sector etc., are adding to HR market momentum.

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3. Public sector public organizations actively outsourcing HR services particularly manpower planning and
development activities are adding another dimension to growth prospects of HR consulting firms.
4. We know post 2003, HR market is evolving steadily at the back of denominated culture of – outsource the non-
core and don't put all eggs in one basket mindset. Hence, evolution of outsourcing HR services as a trend has
been iterative in nature leading to transformation in business models of HR consulting and staffing firms.
5. Recruitment and training are the first candidates of HR services outsourcing followed by payroll, HR diagnostics
and automation. Compulsions of doing it cheap, competition landscape, thaw in governance dynamics, laws
and statutes providing impetus to HR market development. Opportunities in areas of employability, gender
inclusivity and issues around frictional unemployment also act as tail winds in driving HR market.
6. Models of shared services, activity based revenue models like success based fees, performance linked pay,
integrated service delivery and framework across value chain and bench strength paradigms demand consulting
expertise underlying growth prospects of HR market.
7. Rapid movements of last decade in recruitment market because of buoyant economic sentiments and later in
staffing industry due to downturn spiraling pressures in economy lead to changes in HR market space.
Industries such as IEM, Engineering and Consumer services are poised to grow impacting overall growth
outlook. Gender inclusivity, Cross-border hiring and Accentur-isation of basic HR services on other hand
promising to set the tone of consulting expertise required going forward.
8. Growing M&A in India particularly the interest of international staffing firms, Search Firms, HROs define
underlying importance of global contracts leading to integrating global HR industry. Spurt in World Bank aided
projects, sector based reforms etc., in areas of human development strengthening the roots of HR market in
India.
9. News regarding HR Consulting firms lending advisory services to top b-schools in driving placement seasons,
expat hiring in glocal companies particularly talent from Europe, addressing human resource development
concerns in industry etc., is a sign of promising career of HR market.
10. Computation of HR market size via service tax filing, primary research and secondary data lead to
defining and exacting the definition of recruitment and HR industry in India and the future of consulting firms
as lead actors in developing HR market place.
Author: Kazim Ali Khan
ERA and E&Y report 2011 suggests in a recent HR market survey report that on an estimated basis HR market grew from INR 127 B to
INR 228B (FY 08 – FY11) at CAGR 21%. Staffing solutions comprise 80% of the market and rest is that of other segments. These
figures do not include value of services rendered under shared services model, HRO etc.
Author is an experience HR consultant and views expressed are based on experiential learning.