Info Edges Job Speak Index has indicated a pick-up in the past two months, driven by an improvement in hiring trends at software, BPO (business process outsourcing), and pharma companies. Info Edge gets around 80% of its revenue from the recruitment business (primarily naukri.com), which has seen slower growth in the past 2-3 quarters due to the weak macro-economic environment and low business confidence. We expects hiring activity to pick up in FY14 as offshore IT services spending should increase driven by a relatively stable macroeconomic environment, relative stability in large client organisations, and regulatory deadlines that will force installations and/or upgrades of IT systems in key sectors, such as banking.
Channel checks with IT company management and leading HR services providers indicate that the threat to Naukri’s business from the growing popularity of LinkedIn is limited. In addition, although LinkedIn was successful in gaining market share in the job classifieds / candidate search market in the US, it made limited impact in Australia where traditional online recruitment firms like seek.com continue to be dominant.
Further, HR agencies such as Allegis in India indicate that their preference for resume database access has not changed much in the past three years. One of the key reasons seems to be the larger database at Naukri (32m vs. ~19m at LinkedIn). Naukri, for its part, is investing in improving its products and expanding its range of services. Our interactions with the InfoEdge management indicate that the pipeline of new product launches at Naukri is robust. One of the key products is targeted at referrals. Internal referrals are responsible for a bulk of lateral hiring in many firms. At TCS, for instance, internal referrals are responsible for more than 50% of their lateral recruitment.