The economy is going through a bad phase and companies are hardly recruiting. Naukri.com, a leading recruitment website belongs to the Info Edge group and Hitesh Oberoi, CEO & MD of Info Edge believes companies are cautious about hiring at this point.
Although, business could have been better but, it is not as bad as in 2008-09 when the market froze and companies had stopped hiring, said Oberoi. However, recruitments are bad in certain sectors like telecom and insurance, he added.
Meanwhile, certain companies have been forced to downsize and are hiring in certain parts of the business instead of recruiting new members throughout the organization.
Here is the edited transcript of the interview on CNBC-TV18.
Q: How is business at Naukri, very tough considering that people hardly seem to be recruiting?
A: Business could definitely have been better but it is not as bad as we thought it would be given the GDP growth rates. Certainly it is a lot better than 2008-2009 when the markets just froze and nobody was hiring. But it is not as good as it was last year at the same time.
Q: Are there any particular sectors that are showing some improvement that would give us a check on which sectors would do well in the equity markets. How is IT doing?
A: IT is fine. What we are seeing right now is that except for a few sectors which have been in very bad shape for a while now like telecom and insurance, in other sectors it is very company specific. Some companies are still hiring, they are paying us a lot of money.
They are paying us more than last year while others are not. I think it is a company specific thing right now, not a very sector specific thing except for sectors like telecom and insurance.
Q: For people even other than those who are investors of Info Edge who is paying, who is hiring and who is firing?
A: I don't think many companies are firing at this point in time but, companies are cautious about hiring. What is happening is companies are not hiring for new projects because a lot of new products are not hitting the market. There aren't too many companies entering the market. Attrition rates are still high. They have moderated but they are still in double digits in most companies.
So many companies are hiring to replace people and many companies are hiring in parts of the business, not in every part of the business. Of course, some businesses are not in very good shape and companies may be downsizing in those parts but, in other parts of the business, they will still be hiring.
Q: The stock markets tell you that pharma does well at such times but FMCG companies have been on the rise, so is stable kind of consumption the place where hiring is happening. Is it sales kind of area and more importantly to come back to your company how will revenues grow in FY13 vis-à-vis FY12?
A: Hiring in sectors like FMCG and pharma has been stable and has been on the higher side for the last couple of years. The problem however is that these companies do not hire too many people so a lot of job creation does not happen in these sectors. Jobs are mostly created in services kind of sectors like IT, BPOs, KPOs, Analytics, engineering companies who put up large projects. That's where a lot of job creation is so while pharma companies and FMCG companies have been doing well unfortunately, at least for us they do not hire a lot of people.
As far as our revenues go this year, in the first quarter Naukri revenues grew by 14% while Info Edge revenues grew close to 20% which is little less than growth last year at the same time. But we are still bullish on the economy. We are still hoping that the situation will turn around very quickly and we are continuing to invest in our business as if it is business as usual.
Q: We have CLSA writing yesterday that 99acres is showing some signs of a pick up, are you witnessing that? Is there some up turn in the real estate market? At least from what we get in terms of feedback from the realty companies, sales are not very buoyant at this point?
A: You are right. The real estate sector is not doing very well. In fact transactions in most markets are down 25-30% year on year. However, 99 acres is doing well because it is a very small business right now. We did about Rs 35 crore of revenues last year and broke even. So we are still penetrating the market.
The truth is that the intra day is at a very low cost way of getting more and more customers for your projects and therefore, we are able to get more and more customers even though the market is low and there aren’t that many transactions happening. I would not read too much into the growth at 99 acres and equate it to the real estate market because we are at a very early stage of our business and we can continue to grow even though the sector does not grow. But yes, 99acres is doing very well.
Q: We understand that you suffered a rise in deferring of revenue collection and I understand that you are trying to correct that situation. What is the debtor days now in the second quarter compared to the first quarter. If it has indeed improved will that begin to tell on margins in some fashion?
A: Actually we do not have debtors. When we defer revenue, it really means that we collect the revenue in advance. So we collect money in advance and we recognize the revenue over a period of time.
What went down last quarter were our deferred revenues which basically means that collections growth was lower than our revenue growth. We don't have a debtor problem. We actually collect the money in advance.