Clearly, advertising agencies in the country are frenetically downsizing. For the first time, this Rs 5,000 crore service industry is taking a hard look at its main resource, people. And working overtime are some of the agencies newly set up human resource development (HRD) divisions.
While some are reducing head count, others are freezing recruitments. The rest are all resorting to need-based hiring. Says V Shantakumar, managing director of the Rs 89 crore Sistas, With revenue growth not keeping pace with costs, there is overall caution in the industry.
HTAs chief Mike Khanna agrees. We do not anticipate business to grow the way it has been galloping in the past, he adds.
For the last three years, the industry has witnessed growth rates of 40 and 30 per cent. With 15 per cent growth this year, and no signs of clients increasing ad spends, agencies are forced to scrutinise wage bills more closely.
At Enterprise-Nexus, it is of even greater concern. Last years merger of these two middle-order agencies sent the wage bill soaring by 37 per cent. At the same time, per capita billings increased from Rs 40 lakh to Rs 45 lakh. To enhance billings per person, the agency is gearing for a trimmer fit. In the last 10 days, about 30 people across the board were asked to leave. We are not downsizing but rightsizing post merger, says Rajeev Agarwal, managing director.
Of the 400 employees, Agarwal admits to carrying a 20 per cent surplus load. People were given a three-month period to shape or ship out. The grace period was further extended to six months. With the industry not showing signs of recovery, and Enterprise-Nexuss capitalised billings falling below projected targets (from Rs 160 crore to Rs 140 crore), Agarwal was forced to wield the exit policy. At all our locations, it was a combination of being redundant and not carrying their weight, says a candid Agarwal.
That hasnt stopped him from recruiting entry level graduates. In three days time, he flies to Ahmedabads Mudra Institute of Communication and Advertising (MICA) to snap up 12 or a quarter of their Class of 98 students.
With a headcount of 306 at Sistas, Shantakumar claims he could do with about 10 per cent less. Today, it is not the quantity but the quality that he is counting on. We have become more choosy now. A year ago, the qualifying numbers didnt match up to the management of in-house ad business, he says.
Clarion had a freeze on recruitment, but they are looking for people to service big accounts. Their tie-up with Bates Worldwide has seen some major clients like BAT and Nokia move to Clarion. While these two accounts will soon have dedicated people, Clarion will not take on fresh recruits.
Says Kiran Khalap, ceo Clarion, To control costs, we are stretching people to gain market share. Adds Jonathan Pinto, the agencys head of human resources, We are hiring much lower. From a dozen management trainees across five offices last year, Clarion is today taking on four entry level people across two offices.
Overstaffing may not be an issue at HTA, but according to Khanna, the agency needs to improve the way it functions. The fault is not with the people but with the way jobs are processed, he says. From 36 per cent growth per annum five years ago, HTAs growth has slid to 25 per cent today. And Khanna believes it could slow down further. So he has asked his HRD manager to go slow on recruitments.
The go slow on jobs is reflected at the campuses. At Narsee Monjee Institute of Management Studies (NMIMS), Mumbai, course co-ordinator Cajetan Pinto is not too optimistic. Last year, almost all the 30 students of the post graduate diploma in advertising and communication management at NMIMS were selected on the campus. By all accounts, with agencies reluctant to take on freshers, it is going to be a bleak patch this year, he says.
It is a ditto story with head hunter Brinston Miranda. In the last one year, he placed 36 people at senior and middle levels in servicing, creative and media. He claims, business was more robust the previous years. According to him, the current lean period has made agencies more demanding and choosy. The focus is more need driven, he says. Earlier, recruitments were based on a general feel good nuance. Today, they are looking at qualifications, ability to lead from front , besides a high level of personal skills.
To help them choose well, agencies are not relying solely on head hunters. HTA, Lintas and Clarion and Ulka have HRD divisions.
Thats because, until last year, nobody expected the boom period to end. Anticipating business, advertising agencies went on a recruitment spree. Mouthwatering salaries were brandished to woo people in creative, media and servicing. But while new business did come in, many of the existing clients were deferring ad spends.
Secondly, there were the global realignments. With shifting loyalties between clients and their agencies, account shifts grew at breakneck speed. A media analyst claims, in the last 14 months, account movements went up from 25 per cent to 40 per cent.
In this scenario, agency personnel are staying put. With jobs hard to come by, people shifts are on the back burner. And agencies are investing in training. For instance, Sujata Cherian, head of Lintas human resource division says that the agency spent Rs 60 lakhs this year to train 400 people. In May, this year, Lintas launched a career development programme. As Cherian says, It not only helps you train your staff but retains brand loyalty. But more than that, as Mervyn Dias, a senior account executive in a leading agency says, At least, Im happy I have a job.
As the industry shows no signs of picking up, ad agencies are clamping down on recruitments
