Recruitment through employees gets going

Success rate & economy spur internal referrals

Sneha Ranka, a software professional taking home a salary package of Rs 40,000 per month, recently earned an additional income of Rs 20,000 at her workplace.

This supplementary income was neither an increment for exceptional performance nor a bonus given to her by her employer. It was a reward that she got for helping her company hire a candidate.

With more and more IT and ITeS companies dotting the landscape, the demand for good candidates is far outpacing the supply. Companies, therefore, are looking at various means "� from campus recruitment and placement agencies to job sites and internal referrals "� for recruiting the right candidates.

"Internal referrals are becoming an important source of recruitment for companies because of their high conversion rates as compared to recruitment via other methods," says Harish Bhattiprolu, director, sales, Kenexa Technologies (India), a provider of talent acquisition and retention solutions.

"This is because while there may be hundreds of people who read an advertisement and vie for a single job, in the case of internal referrals it is limited to a few," he adds.

A case in point is Integreon, a player in the KPO segment that has seen a conversion rate of around 70 per cent for internal referrals as compared to around 45 per cent (after pre-selection screening) through other means.

This apart, there are some cost savings when recruitment is made via internal referrals. For instance, when a company hires the services of a placement agency, it has to give a percentage (8.33 per cent - 10 per cent) of the incumbent's cost to company (salary and perks) as fees to the agency.

For internal referrals, the percentages tend to be lower, Bhattiprolu says, adding that, therefore, a company saves more in recruiting via referrals, though the reward money for internal referrals has grown larger today as compared to a couple of years ago.

According to Gautam Sinha, chief executive officer of TVA Infotech, a recruiting company in the IT sector, the rewards for internal referrals in the IT sector start from Rs 20,000. "In the BPO sector, it is comparatively less," he says.

Lokendra Tomar, vice-president, knowledge service at Integreon, says that internal referrals bring in other advantages as well.

"We have seen that candidates who are recruited via referrals tend to stay longer with the company. This is because they are already aware of the company, its work culture and their pay-scale," he adds.

Integreon employs around 1,000 people of which around 200 candidates have been recruited via referrals system. The company is now setting up its third centre in Mumbai, with a capacity to house 600 people, which will be operational by the end of this month.

Sinha, however, says that companies should use the referral method cautiously as it has the tendency to become ineffective as well.

"Employees sometimes will not be diligent while referring people. There are some who send group mails to all and sundry about a job opening in their company thus making the search random and not focused. Internal referrals should not become just a means of earning additional income for the employees," he adds.

Bhattiprolu says that taking this issue into consideration, some companies have started putting a cap on the number of people an employee can send references about.

"This is to ensure that employees do not eventually turn into recruitment consultants in the name of internal referrals," he adds.