Talent recruitment firms are scouting for business from smaller start-ups that have recently raised funds to fuel growth, diversifying away from larger consumer Internet clients that have frozen hiring amid a funding slowdown, industry executives said.

Talent recruitment firms such as Wenger & Watson and Anzy Careers Pvt. Ltd and even the more premium search consultants such as Longhouse Consulting are entering new sectors like enterprise software or software-as-a-service (SaaS) and financial technology.

Some talent recruitment start-ups such as Belong.co are also investing heavily in technology to enhance their services.

The move by talent recruitment tracks the start-up funding trend this year. While funding has cooled off for consumer Internet start-ups, investors have shifted focus towards companies in enterprise software and financial technology.

In November-April, the number of new employees in e-commerce companies fell 61% from the six preceding months, according to data from Belong. In the same period, the number of new employees in SaaS companies increased 32%.

Still, many recruitment firms may struggle to show strong growth this year, as extravagant spending by the likes of Flipkart, Ola, Snapdeal, InMobi and others on hiring talent across levels is clearly a thing of the past.

There is a lull this year compared with 2015, but hiring hasn’t stopped, said C K Guruprasad, partner at recruiter Heidrick & Struggles.

“The demand is coming from a set of start-ups like fintech and product start-ups. (But) companies have become a lot more selective now and try to analyse if the hiring is justified and if they can first fill the role internally,” he said.

This year will be tougher for recruitment firms than last year, said Ashish Sanganeria, partner, Longhouse Consulting.

“Niche recruitment companies may struggle because a lot of the big start-ups are obviously not hiring aggressively any more. As far as we are concerned, we expect to show strong growth because we have a more diversified client base. We are catering to MNCs as well as start-ups at the Series A and Series B levels, which have recently raised funding and are eager for new talent. Plus, you are seeing a lot of hiring in areas like SaaS”, he said.

Recruitment start-ups like Belong are aggressively targeting large enterprises across IT and software, retail, analytics and BFSI sectors, having gotten initial traction with start-ups.

“Expanding our focus to large enterprises was always part of our growth plan—and that’s what’s happening now. Our initial focus was to achieve product-market fit with fast-growing companies and start-ups in the Internet/e-commerce space, and only then move to larger enterprises. Given that we have been able to see success with almost all the top players in the SaaS and e-commerce segment in the country, we felt the time to move was right,” said Vijay Sharma, Co-Founder of Belong that raised $5 million in venture funding.

Sharma said Belong was also looking to expand to other countries to target the potential for growth that comes from large enterprises there.

Enterprise start-ups are making the most of the lull in hiring by consumer Internet firms.

“Last year, we found it very hard to get talent as many of them were aggressively hiring and the pay packages being offered was disconnected from reality”, said Archit Gupta, CEO of ClearTax, a tax filing platform, which raised $12 million in Series A funding from SAIF Partners in June.

“This year, the access to talent has been easier and people are thinking about joining companies that have strong business fundamentals. The people we contacted last year are available for us to hire now, so it is a great time for us.”

Source: Mint