Hiring environment continues to be weaker: Info Edge

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Hiring environment continues to be weaker: Info Edge

In an interview to CNBC-TV18, Ambaresh Raghuvanshi, chief financial officer of Info Edge says, the hiring environment continues to be weaker. “The recruiting market is definitely a little weaker than it was same time last year. It's definitely weaker than a couple of quarters back,” he adds.

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In an interview to CNBC-TV18, Ambaresh Raghuvanshi, chief financial officer of Info Edge says, the hiring environment continues to be weaker. "The recruiting market is definitely a little weaker than it was same time last year. It's definitely weaker than a couple of quarters back," he adds.

Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Gautam Broker. Also watch the accompanying video.

Q: What's the outlook looking like? What's the on ground situation telling you, particularly with respect to the job markets?

A: The recruiting market is definitely a little weaker than it was same time last year. It's definitely weaker than a couple of quarters back. There are no surprises about that. Index of economic growth and business confidence level haven't looked great in last six-nine months. That's reflected in somewhat slower hiring environment. Sentiment continues to be weak. Decision making continues to be somewhat slower.

It's not really translating into lower numbers for us yet. But from a lead indicator- Naukri job speak index or our collection numbers- we are certainly seeing a deceleration. We are not seeing a 2008 kind of scenario where everything froze, that was one off event which caused market globally to freeze almost all at the same time. This time it's leaner or with certain amount of gradient drop in businesses. But clearly the hiring environment continues to be somewhat weaker.

Q: If you can detail a little more about this job index that you are speaking about? What exactly is it telling you. Are jobs being cut or it's just hiring slowed?

A: The index measures hiring activity based on number of jobs posted on Naukri. Naukri had 42,000 clients last year and cutting across industry sectors. While there may be a certain bias towards services sector, but it cuts across all industry groups. So, it started with a base of 1,000 in July, 2008, went to a low in early 2009 of little under 700 so 30% drop in demand. So that was like a real contraction. Then it climbed up. In 2010-11, it was over a 1,000 back again. It went to about 1,100-1,200. So, right now what we are seeing is deceleration. It's still holding well above 1,000. It's not a slowdown, but it's been somewhat flat.

Q: What should we therefore pencil in in terms of revenue growth for you, for the current year 20% is what some brokerages are looking at? What you all will do more importantly in FY13?

A: Last year, we grew at about 28-29%, that's FY10-11. FY11-12, in the first nine months, we have grown at about 25%. But collection growth has been slowing down, while revenue numbers are still looking okay. That's because we collect money in advance and then recognize the subscription and therefore the revenue. This smoothens out the revenue to some extent. That's because of our accounting treatment.

While it's looked okay at 24-25% this year, but clearly the outlook seems to be weakerb unless there is a pickup in economic activity and then we see the effect of that on our business with the lag of a quarter or two. So, if economic activity does pick up and the markets certainly are factoring that in, we are not seeing signs of that immediately atleast in the hiring environment. Looking ahead, at 2012-13, we don't have much clarity at this point of time. If economic activity does pick up, within a quarter or two, we will see the affect of that on our numbers.

Q: Will you see any turnaround at all in your non-Naukri.com properties? Do any of them get into cash break-even at all? What kind of timetable are you looking at?

A: 99acres, which is our real estate listing business and it's a leader in its space, is doing really well. First nine months of the year, it has grown at around 50%. So, despite the slowdown in transaction volumes in the underlying real estate segment, it's still doing very well which is a good sign. That means that it's finally begun to add value. That's also a function of time. It's taken six years for us to get to this point. So, there is a certain element of time elapse.

Unless you give a business time to execute and to add value and to become really relevant in a category, it won't happen. So, it reached breakeven last year and this year it has operated at close to break even. So, we can expect that for the next six months to a year, it will be near break-even. Beyond that, if it breaks through, we should hopefully make a profit.

Jeevansathi and the education listing business Shiksha continue to be in an investment mode. Jeevansathi is number three in its category and the challenged are much harder. Shiksha is only little over three years old. So, it's again question of time elapse.