With COVID-19 throwing a large number of techies out of job, the demand for outplacement firms has significantly jumped.
But with enterprises already under financial stress, outplacement executives are looking at re-negotiation of contracts and restructuring of existing programmes in the coming months.
Outplacement services typically involve assisting employees considered redundant to find new employment. It could be either provided as a benefit directly by the employer or through a specialised agency.
Since the virus outbreak, the IT/ITeS sector has seen layoffs, primarily from smaller firms. These firms have seen a steep cut in client spending and project deferrals. So far, some business process management firms such as Fareportal and Teleperformance have laid off a few hundred employees.
Ajay Shah, Head – Recruitment at staffing firm Teamlease Services pointed out that come June, the number would increase as companies get more visibility on the demand and recovery.
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Hiring executives said the number could be as high as 1-2 lakh in the next 3-6 months. Shah said it will be a huge opportunity for outplacement companies.
Queries for outplacement have gone up 30-35 percent in the tech space since the virus outbreak intensified. In April an outplacement company did 40 percent more business compared to 2019, an executive said on condition of anonymity. Last year, the company did outplacements for 1,500 techies.
At the same time hiring activity has come down by 60 percent in staffing firms and in specialised staffing, demand has almost come to a standstill, executives at multiple firms agreed.
There is a hiring freeze, especially for laterals, across major IT/ITeS firms such as TCS, Infosys, Wipro and HCL Tech, as they are looking to utilise existing resources to improve efficiency and cut costs. All these have created uncertainty around tech staffing in the coming months.
It is on the back of this demand that some firms that were primarily into hiring are now exploring outplacement opportunities.
However, it is not all good news for them as well and there are challenges to navigate.
The biggest challenge is the job openings available in the market given the scale of outplacement. Shah of Teamlease said during the 2008 financial crisis, outplacement companies were able to place only a fraction of people who were laid off.
It is unlikely to be any different this time. Most commented that 100 percent placement is impossible and all the firms can do is give them coaching, help them build their resume and connect them with companies that are hiring. The situation is even worse for mid and senior management between 10-20 years of experience, where the openings are even less.
Prashant Pandey, Country Manager, Right Management India, which is a part of Manpower Group, said, opportunities apart, the time it takes to place an individual would be longer. For instance, if it took 2-3 months earlier it would take double the in the current scenario.
Given the financial stress companies are under, not all firms would be in a position to invest in outplacement. Pandey pointed out, “Though the demand is more, there is a difference in appetite to invest between pre-COVID-19 and post-COVID-19.”Earlier, companies had a better appetite for investment. However, that is not the case now as most of them are looking to cut costs due to coronavirus. “Even past clients where there was an annual contract they are now looking at reevaluating it. They are choosing for shorter duration programme,” he added.