Randstad, the second largest staffing firm in terms of revenues globally, is focussing on growing organically in India. Randstad India's Chairman Paul Van De Kerkhof gives Praveen Bose the reasoning behind this strategy. Excerpts:
Where is Randstad headed in India today?
Ultimately, we want to be a blue collar staffing firm. This is still dominated by small companies... so we have to fight "below-cost" levels. Our primary focus is the white collar service sector market that we aim to be in. But, regulations need to be clear on this front. With India not ratifying the ILO Convention No. 181 on private employment agencies which provides the appropriate framework for regulation, it does not provide a level-playing field for all staffing firms. It's an important platform. There are niche companies in niche market that compete on price.
What makes global firms stay with you?
One example why global clients prefer to work with us is because of transparency. So, while entering the tendering process the consideration is our pricing. The local vendor offers at below cost level. Hence, they probably don't pay enough, or do no tax reductions.
The local firms probably cut down on social security taxes to keep it below cost price. If price is a dominant factor we have to pull out.
What is your growth strategy, organic or inorganic?
We aim to grow organically. A big advantage then is that you know the company culture. If you acquire you have problems on integration. If acquisitions have to work, it could be niche players in engineering part or some geography we want to be in.
We could be entering assessing, training and coaching in future in India. If we want to grow geographically or in expertise, we have to strengthen internally.
You have been bidding for many a government project. How is your business from the government sector going?
Government is an important part of our business in India. If the government opens up, it will be as important as commercial market. Where there is a government, there is an opportunity to create jobs. Partly, government is a client. In Europe, the government has opened up. As part of our CSR, we want to create jobs in the system.
Is China giving you more opportunities than India?
In China, people are moving from villages to cities, and it is important to train them for jobs in cities. We have the responsibility to train people for the labour market to enable them to enter companies. In India, we need to do more of that sort of work. We focus on permanent business there. In China, we have no blue collar employees. We have staff for the banks, telecom companies. It's mostly white collar. Chinese complexity is in the licences in terms of recruitment.
Our staffing business is much smaller in China. China is not one country. It has 38 provinces with different regulations. In India, if you have employees, you can employ them across the country. It is not so in China. In China our focus is on Shanghai.
Has temping taken off in India for you as much as in Europe?
In Europe, project staffing industry and people know the way, and don't want a fixed job. There's no lifetime job anymore. They work for two years in one company and have another job. There the system facilitates it there while in India, it's not in the system yet. Temping make companies flexible and make them less vulnerable to market volatility. It creates a flexible layer in the company. We have the expertise together with market development and know how to develop the market. As part of the CSR, we work at breakeven. More shareholders ask what do we do for CSR.
What's the difference between temping and permanent staffing?
Temporary staffing is for big companies since it demands pre-financing of companies. But in permanent staffing, you can start if you have a laptop and an iPhone. If we acquire a firm and if the founder of that acquired firm leaves, you lose clients. Acquiring staffing is acquiring clients. If he leaves you lose that. If you acquire a company it is dependent on the individual. So, we want to grow independently and autonomously.