Economic revival puts outplacers on the mat

While a revival in the economy is music to most ears, it may sound a death knell for certain businesses.

Ironical as it may sound, certain sections of the HR industry are set to lose out due to the sprouting of green shoots. These are the outplacement sections and agencies of consultancy firms that will see business going down the hill due to ebbing of the recession.

Outplacement agencies, or career transition services, seek to place employees who have been given the marching orders due to cost cutting measures by the company, or its inability to sustain itself in a certain vertical, or because the induction of  a particular batch of freshers could not be accommodated by the employer.

It is the employers who hire these consultancies to provide their outplaced staff with infrastructural needs, career counselling sessions, conduct psychometric tests and help them get recruited in other firms.

Each consultancy has a stipulated fee which is charged to the client. Some charge a certain percentage of the fee during the counselling and the rest after the candidate is successfully recruited in another firm.

Some firms charge retainment fees from the client since they may get a lesser percentage from the other firms where the candidates are placed.

According to AR Rajesh, VP of staffing firm TeamLease, the outplacement segment forms only 10 per cent of the business. For freshers the fee charged by the staffing firm is usually one month of the candidate’s salary but in case of lateral placements it could be 16 per cent of the candidate’s annual package. Retainment fees could run the bill as high as Rs50,000 to couple of lakhs per batch of employees in addition to the usual recruitment fees.

“We are definitely seeing a dip in the client sign-ups but are not ruling out business completely till the next couple of quarters,” he said.

It is difficult to place pink-slipped employers during recession but the timeline given by the companies is mainly one to two quarters from the time the person is terminated. Most clients were from IT, BPO and engineering companies that had laid off people in large numbers.

Sudhakar Balakrishnan, CEO of staffing firm Adecco, said that clients from all sectors had signed up with Adecco’s career transitioning unit.

With the economy looking up, the need to retrench people would be reduced, he said.
Consultancies also have tie-ups with chartered accountants and certified financial planners who counsel the candidate where he should invest the money received as a severance package.

This is especially for the senior-level employees, who get a large sum of money.  Although a seasonal and nascent business practice in India, career transition service is picking up as it gives employers a better image with the staff which still remains on the rolls.