How to Start a Placement Agency in India

The role of a placement agency

There is a vital role played by placement agencies in recruitment of manpower in companies.

They bridge the gap between the companies/businesses and job candidates. They help companies find suitable candidates for their jobs and at the same time help the candidates find roles fitting to their qualifications.

There has been a substantial increase in the number of HR recruitment agencies in India in recent times. Post pandemic many companies are on a hiring spree.

The outlook is positive in the job front and it is high time to start a placement agency to fulfill needs on the market.

Choosing a niche

Going generic can be problematic as you will have to cover a wide range of topics. Choose a niche to go with.

Pick a sector that has demand. It can be IT, Finance, Banking, Hospitality… any niche that needs manpower and is actively recruiting.

You will also need to decide whether you will offer candidates full time, part time or both.

Closely look at the competition. What they are doing to get clients, how they are marketing their brands. Note down positive and negatives aspects both.

Try to improve the positive sides and give your own touch and minimize or eliminate the negatives where possible.

Build a database of job seekers and potential recruiters. Companies in your niche and in your locality are all potential recruiters.

The recruitment model

Recruitment agencies typically offer full time, part time or on-contract basic candidates. The fee is priced accordingly.

In general full time candidates are offered more, though post pandemic, part timers are alos seeing an uptick.

On contract candidates are offered from the recruitment agency itself. The agency trains such candidates and then offer them to companies on a contract basis.

Out of the three models on contract need more manpower and seperate branch for handling the training and orientation, hence very few recruiting agencies offer this.

Decide the model that you are comfortable with and can start with right away. You can update the model later and add another one if needed.

Where to start

You can start your agency at home to save costs. You will find it difficult to interact with clients and candidates in that case, as home is hardly the place to conduct business. But yes, it can be done.

Or, you can opt to take a rental somewhere. Typically, places with good communication network are preferred places, but those come at a cost.

Places at a bit of distance from the city/town centers are ideal for starting as they are not too costly. Later you can move to better accommodation when the budget permits.

An owner of a placement agency I know personally remarked that people will come to placement agency in desert too! Though a bit of exagerration, there is some truth in the statement as there are many job seekers in India.

You will need a couple of chairs and a desk for starting. Of course, you can go ahead and spend lavish on decorating your office with furnitures, but that will not be wise at the onset.

Always keep the costs low at the beginning, and then spend when you are scaling up.

You will also need a personal computer with internet connection, office loaded and. The computer must be loaded with microsoft office or similar software.

How to market

One surefire way to get candidates is to visit the training centers and acquire resumes.

Training centers are always looking to place their trainees somewhere. Contact the centers and offer them vacancies or strike a deal to provide placement within a time range.

Job and career fairs are huge for all parties concerned – job seekers, recruiters and placement agencies.

You can find recruiters and get deals for partnerships, you can job seekers and collect their resumes.

New agencies may find it hard to get recruiters or job seekers, as most go for establised ones. Your success will depend on how well you market your brand.

You will have to do the hard work of cold calling potential clients to offer them candidates. Local phone directories and yellow pages are good enough for that.

Print some business cards and pamphlets. Distribute them in theses fairs and also in malls wherever the opportunity arises. It will help spread the word about your agency.

Be on the lookout for any job related ads in online yellow pages or local newspapers. Contact the company and offer your services.

Network with people. Opportunities present themselves when you know a lot of people.

Social media is great platform for extending your business. Follow companies in your niche, follow the recruitment heads in companies.

Twitter, Linkedin and Facebook all should be included in your social media strategy.

Take the help of technology

It makes sense to use technology where applicable. As I stated earlier, most of the things are moving online and placement agencies are also shifting a lot of their work online.

You will need software that makes your work easier. Depending on your need, get some recruitment software.

There are paid and open source software for this purpose. Decide what floats your boat and then go ahead and get it. You will be happy that you took the step.

There are also tools like salesforce for automating the marketing to some extent. If you have the budget they definitely go for it.

Or, use plain excel sheets to keep track of your customers and candidates.

Create your brand website

A website focused on your brand is an important step. You do need a website. Things are going online and you do not want to lag behind.

Creating a website is easy now. Buy a domain name that is same or close to your brand name, host it somewhere and then design a professional looking website.

If you do not know how to create a website, then you can outsource this to some expert. Go to https://upwork.com to find a suitable professional to do the job for you.

With a website you can advertise online in related facebook groups, google ads, forums and blogs. The traffic from these sources should be directed to your website.

Licenses and fees

You will need to do business registration, tax registration, esi/pf registration and recruiting agency license(in come cases).

Business registration is mostly done at local municipalities (in case of cities/towns) and panchayats (in case of semi urban/village areas).

Tax registration is done with the concerned Govt. department (https://www.gst.gov.in/)

Remember that getting licensed is a necessity and will also help you gain authenticity and trust.

1. Business Registration

You can start a recruitment business as a proprietorship, partnership Firm, LLP, private limited company or limited company.

It may be tempting to start the business as a sole proprietorshop due to the simplicity.

But LLP or private limited company is a better choice because you get the Limited Liability Protection.

The Limited Liability Protection is for compliance with stringent labour laws and ESI or PF Regulations. In addition, such companies are easily transferrable and owner can later exit the business if she/he wishes to.

2. Tax Registration

Any recruitment business needs to have service tax registration. You must get a GST registration once the yearly return crosses Rs. 20 lakhs.

You will also need to charge service tax at 14% and submit the same with Govt. if the yearly sales exceeds Rs. 10 lakhs.

3. ESI/PF Registration

Emplopyee’s State Insurance program is mandator if you are employing more than 10 people in your organization.

It is also needed if you are providing manpower to others on a contract basis.

The Profident Fund registration will be needed if you employ more than 20 people in the company.

Recruiting Agent (RA) License

If you want to recruit Indian citizens in foreign shore, you will need a Recruiting Agent License. The recruiters are registered under The Ministry of Overseas Indian Affairs.

The registering authority is the Protector General of Emigrants (PGE).

The form for applying is here https://emigrate.gov.in/ext/preAgent.action

There is a host of requirements for this license. The general steps can be found here https://www.mea.gov.in/ras.htm