Your billings have improved by about over 65%. How are the trends across businesses like , 99acres, and Jeevansathi?
Well, we have been pleasantly surprised by our performance last quarter. This is despite a terrible April and May because of the second COVID wave. Last year, of course, our business was massively impacted, but this year thanks to the war for talent in IT, we have not seen a market like this in the last 5 years. Frankly, the talent market is super hot right now. Every company is hiring. Every company has higher attrition than they had a year ago. In fact, attrition levels are at a level which most companies have not seen in the last 10 or 12 years, especially in IT and digital companies.
That is really what is driving growth in Naukri and even July was very good and very positive for us. Let us hope this continues. The non-IT part of the business is still under pressure because that is more indexed to the Indian economy and what happens on the COVID front. We are confident that even that piece will start recovering in the second half of this year.
99acres was a little different because it was massively impacted by the second COVID wave. People do not buy houses unlike hiring; hiring can happen digitally. Companies are happy to interview online, they are happy to make offers online even without meeting candidates, but people do not buy houses till they see the house a couple of times. That was impacted massively by COVID in Q2. So there the recovery for us was muted. The business grew but was expected to grow much more.
Even there we saw solid recovery towards the end of the quarter. June was better than expected, July has been great. Even that market is back on track. The Shiksha business also continues to do well. It has positively surprised us. In fact, it made a profit this quarter for us also on a small base. So, all in all, things look very bright on the operating side, unless there is another COVID wave. So, fingers crossed. But if this trend continues, then this should be a very good year for Info Edge.
When it comes to Naukri you have seen the best quarter in about 15 years. Give us more info about the trends that you have seen within IT hiring in specific.
There are maybe two or three stories playing out there. One is this whole startup story which is not a big part of our story because we do not really do a lot of business with startups. Of course, it impacts our hiring, but the startup market as we know is on fire. More than 24 unicorns in the last one year, every company has raised hundreds of millions of dollars and they all want to hire people. But they all want to hire very high-quality talent and that talent is limited in number.
Therefore, there is a massive war for talent in the startup space. In fact, companies are finding it difficult to stay at the same level. I mean, they are not able to add headcounts, that is how bad it is. Then there is a whole IT services market, the export market, the Indian IT services companies. There are thousands of them and they work with international clients. There what is playing out is this whole digital transformation story which is not just an Indian story, but it is a global story thanks to COVID.
Every company overseas wants to go digital. Every offline company wants to go digital. There are online companies of course. They have been around for the longest time and they are getting more and more funding, but every traditional company whether it is a retailer or an airline or a media company, just name the sector. Every company in every sector now wants to go digital and they want to be aggressive on digital. Previously they used to say ‘okay, the next five years we get 20% of our business from digital, it is good’. But today they all want 70% of their business or even 80% of their business coming from digital in the next three-four-five years. Banks, insurance companies, airlines, retailers, media companies, you name them.
That has created massive demand for digital talent globally and, of course, all these companies look to India for digital talent and for IT services. But even India is right now not able to deliver. There is a shortage of IT professionals in India who can actually meet demand. So, let us see how this plays out. I hope it is not an aberration. I hope this is a long-term trend. Chances are that it is because the digital story is here to stay. It is not going to change.
Then you are seeing this digital story play out locally as well. Every local non-IT company in India wants to go digital, whether it is a local bank or an insurance company. They all now want to hire IT people. Traditionally they used to hire non-IT folks which is why you see this massive dichotomy in the hiring market. There is massive demand for IT talent and not much demand for other talent, and IT salaries are going through the roof.
Anecdotally I can tell you that companies are giving 30-50% jumps to IT folks. There are stories you hear of people getting 100% jumps, 200% jumps as well, but only IT folks/people with digital skills, not the rest of the economy. Hopefully the rest of the economy will also bounce back in the next couple of quarters once the situation on the COVID front becomes more normal.
How much of your Naukri business would you classify as directly or indirectly dealing with IT services or IT architect engineers? How does the hiring boom translate into more business for you?
IT and IT-enabled services used to be 40-45% of our business till may be two years ago. If you just go by the demand on our platform for IT talent, it is already maybe 55-60% of our business. Non-IT business has remained flat or declined, and it could – given the current trends – maybe even become higher than 60% going forward. Who knows? How does it flow into our growth? How does it impact us in terms of revenue growth and top line and bottom line?
What happens is when demand starts to look up, three things happen. One, attrition levels start to go up in companies. And because companies’ attrition levels go up, they need more and more people to stay in the same place. Just to maintain that headcount they need to hire more people. Two, normally you see a surge in new business also. You have seen more companies setting up shop or tech startups. You see more companies which had shut down also downsize and try to upsize. That also helps because we get more customers.
And the third thing which happens is that when demand goes up, the company starts buying more products. They start buying more volume and they want more CVs to access, to send more emails to our database, and to post more jobs. So, we get a jump in volumes. Then you get more companies, we get more clients. Lastly and most importantly, because these companies make money from people, people are their working process. People are their raw material. If they do not get people on board quickly, they will lose business.
What happens is in a tough market we end up giving up a lot of discounts to customers. Pricing takes a beating, etc, in a market like these. Companies do not care, so you do not have to extend discounts and you do not have to give any bulk deals. You can up prices and still get away with it. You get higher pricing and volume, and you also get new customers.
Lastly, we have also been launching new products. Those new products get takers because in a bullish market people are more willing and companies are more willing to invest and try out new things as well. So, it helps us on many fronts. It has a kicker impact on our business. Let us see how this plays out. I hope this boom stays and it continues for some time.
