HOW TO ENTER THE US TECH RECRUITMENT BUSINESS?
I had a discussion with Aiyaz Uddin of the Staffingcircle on how to explore the US Tech market. Read on to know more.
What’s your background and experience in the US IT Staffing industry?
I have a decade of experience. I started out as a recruiter, then moved to a senior recruiter position, and later got promoted as the head of strategic business development. I founded Staffingcircle to help people who wish to start a staffing agency. Staffingcircle is not a staffing agency, it provides advisory, brand development and corporate training to IT staffing agencies.
How do people end up in the staffing business?
Generally in two ways:
- They are people from inside the industry who understands the business and venture on their own
- Then there are Indian IT professionals who after spending a considerable time in the US (like 15+ years) acquires the knowledge, contacts and the money required to start the business. They have been through immigration, may have a green card that helps in registering their company in the US and their skillset/experience helps in understanding the requirement of the industry.
How is the US different from the Indian recruitment market?
I can think of three ways:
- Contract and sub-contract hiring is more common in US than in India. A sub-contract is where a company gives a requirement to an agency which in turn outsources to a different agency. Between the company and the contractor, there can be up to four layers – that is four agencies/middlemen. One layer is pretty common.
- Bench sales recruitment: The contract duration for contract hiring is 3-12 months. When the contract gets terminated, the contractor(employee) becomes available. The staffing agencies have bench sales recruiter who tries to get the contractor placed on a new requirement. Recruiters who place contractors available with the agency are called bench sales recruiter.
- Training and placement services: There are agencies who seek out students doing their masters in the US and give them training on technologies which are in demand. The student visa allows for an additional one year employment. So at the end of their studies, these agencies place the students in different companies on contract basis. In India, most of the employees are natives so there is no question of a visa.
How to explore the US Tech staffing business?
Businesses where data is the primary asset like staffing or real estate for that matter have two important parts. One is the lead generation or business development. The other is supplying the leads with the required data. In the recruitment industry, business development manager takes care of lead generation and recruitment professionals provides them with matching profiles scoured from company database, job portals and networking websites like linkedIn.
If you would like to explore as a freelancer, then look up at websites such as upwork.com. Companies or agencies post opportunities on Upwork that are paid on an hourly or fixed or fixed+incentive basis. They may also supply you with job portal login to find matching resumes.
[A job description from Upwork]
If you would rather start an agency, then you’ll do both the parts (lead generation and closure). You’ll hire Business Development Managers (BDM) as well as recruiters. For a lean company, I recommend couple of recruiters for one BDM. If one of your recruiter couldn’t get you the required resume, you can use the other to work on the same requirement with a fresh mind. Your BDM should get enough business to keep two recruiters occupied.
How do BDM generate leads?
As a founder, you have to establish your niche in the industry and set directions for your company. You either fill a gap in the market or be known for catering to a specific requirement. Then your BDM can find out people who have requirements you cater to and set-up an appointment. BDM can do market research by using websites like owler, zoominfo and they can contact key people by using paid tools like linkedin sales navigator.
From where do the recruiters get resumes?
The most common way is to get from job portals. You need to purchase subscription on these portals to access resume. Common job portals in the US are dice, monster and careerbuilder. As you go, you’ll build your own database of candidates and you would need to use a CRM to manage them. You can also do sourcing on social media sites like facebook and networking sites like LinkedIn.
Does the staffing agency need to be registered in the US?
If you’re processing payroll for contract employees, then your agency need to be registered in the US.
What are the options available for agencies not registered in the US?
They can work on a
- flat fee model –The payment can be based on the efforts (posting job requirement on the portals, getting them matching resumes, arranging interviews and follow-up) or it can be based on result (a flat fee per hire).
[Crunchposter works on a flat fee model] - on a percentage basis: For full time positions, you’ll get 7-10% of the annual salary for mid-level IT positions. For managerial positions, you’ll get 18-24% on average
So you may start as an agency in India and once you get a hang of the business, you can then register your agency in the US.
What are the cost involved in setting up the business?
Obviously you need to hire people, get a shared or exclusive office and give them systems. You need to purchase job portals access. Unlike in India, job portals are costlier. So you’re looking at about $3000 for job portals access.
You need to have a professional website, a phone (VoIP), a CRM to track opportunities and candidates. ZOHO CRM does a good job. It’s becoming popular in the US. You can also check out Taleo by oracle.
You may also require LinkedIn sales navigator license. That costs 7k per month INR.
What are the challenges involved?
You need to hire the right people. You’re playing with data. Nothing is real. Your greatest assets are your people. The wrong people can pass your company data to your competitors.
Your entire BDM and recruitment team will be in India but working US hours. That’ll be a nightshift or at best a UK shift.
In what ways would you assist people who’re interested in this business?
I have got them covered. I have udemy courses available at affordable prices for the start outs. They can onboard me as a consultant to develop their brand or scale up their business.
