DIAGNOSES

presents analyses of the management case by academicians and practitioners

naukri.com
Arvind Sahay

Case Analysis I
Avinash Mulky Professor Indian Institute of Management Lucknow e-mail: amulky@iiml.ac.in

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The April-June 2005 (Vol. 30 No. 2) issue of Vikalpa had published a management case titled, naukri.com by Arvind Sahay. This issue features five responses on the case by Avinash Mulky, Pingali Venugopal, Salma Ahmed and Ashfaque Khan, Manmohan Rahul and Shalini Rahul, and Jitendra K Das.

aukri.com is an entrepreneurial firm that pioneered online recruitment and job search in India. The company began as a bootstrapped start-up when the Internet was in its infancy. It obtained some venture capital funding in the year 2000 and has been earning profits since 2002-03. Revenues had doubled every year since 2000-01 and were set to reach Rs. 400 million in 2004-05. naukri.com had emerged as the leader in the online recruitment space in India and in November 2004, Sanjeev Bikhchandani, the firms founder, was pondering over the firmss challenges of growth. Viewed from the perspective of the entrepreneurial life cycle (Price, 2004),1 naukri.com has successfully navigated the first four stages of opportunity recognition, opportunity focusing, commitment of resources, and market entry. In November 2004, it was located in stage 5 full launch and growth. In order to progress, the firm has to grow and move through two further stages maturity and expansion (stage 6) and liquidity event (stage 7). The fifth stage in which naukri.com is currently located is a critical stage because the firm has to choose its strategy for growth. Many entrepreneurial firms either choose to remain small or are unable to grow because of external or internal constraints. naukri.com has the potential to grow. The online recruitment market size is expected to increase substantially in the future. Thus, competition notwithstanding, there is head room for growth. naukri.com had received venture capital funding. Hence, harvesting may be a requirement at a future

Price, R W (2004). Road Map to Entrepreneurial Success, New York: Amacom.

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date. This may need to be done through an IPO. In order to get a good valuation, the firm must negotiate stages 5 and 6 successfully. Hence, choosing a strategy to grow profitably is important. As Bikhchandani contemplated on the way forward, he realized that he needed to address several issues in the short term. The main issue was whether naukri.com was optimally configured for the next growth phase. Other important issues were: how to deal with competition, especially, how to handle price pressure role of the salesforce in futurewhether there was a possibility of generating business growth without a proportionate increase in salesforce numbers changes to be made in incentives, monitoring, and control of salesforce sources of revenue in the future whether revenues could be tapped from sources other than corporate clients using the recruitment services role that RESDEX database would play role of telesales in the sales operations. Looking at the range of issues that Bikhchandani is grappling with, it appears that he really needs to review the companys business strategy. This review needs to revisit and rearticulate the firms goals, its strategy, and implementation plans. In the medium term, Bikhchandani should also think about some important issues like his own personal role in the firm; harvesting strategy for naukri.com investors; management succession; securing strategic assets and capabilities required for the future; and developing the right organization environment in terms of people, structure, incentives, and culture. According to Markides (2000),2 superior strategy involves finding and exploiting a unique strategic position in the companys business while, at the same time, searching for new strategic positions on a continuing business. Bikhchandani may like to contemplate on the following: definition of naukri.coms business who naukri.coms target customers should be, what products and services are appropriate for these customers given naukri.coms strengths, and how best the firm can communicate and deliver these products the appropriate organizational environment that will support the above decisions.
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BUSINESS DEFINITION
naukri.com is currently positioned in the online recruitment and job search space. It can define its business based on products and services delivered or customer functions fulfilled. A possible list of definitions could include online advertising site for vacancies; Internetbased recruitment related products and services business; online resume source; online information source for job seekers on available jobs; online job application method; online resume services for job-seekers, etc. Another way of defining a firms business is to base the definition on the firms core competencies. naukri.com has developed competencies in creating and running a website and associated technologies. The firm is competent at facilitating matches between the job providers and the job seekers using its website and the power of Internet and e-mail. This definition enables the firm to diversify in the future to any product category where the firm can facilitate matches between two or more sets of parties using a website, the Internet, and e-mail through its proprietary technology and databases. A visit to naukri.com website indicates that the firm is already experimenting with matrimonial matches and matches involving owners of building plots, houses, and apartments with those seeking to purchase or rent property. These initiatives could be carried forward to other products and services such as educational courses, cars, etc.

TARGET CUSTOMERS
naukri.com has a list of 15,000 clients. The two major categories of customers are job providers and job seekers. In 2003-04, job providers and job seekers accounted for 91.6 per cent and 8.4 per cent of revenues respectively (p122 of the case). Placement agencies were an important customer group for the firm. In the last quarter of 2004, 10 per cent of the clients were placement agencies which contributed to 60 per cent of the jobs and 30 per cent of the revenues on the naukri site. Other important customer groups were firms from IT and related areas (23% of job openings) and telecom and FMCG related firms (5% of job openings). naukri.coms revenues from its 15,000 current clients will amount to Rs. 400 million in 2004-05. The average annual revenue per client works out to Rs. 26,667. naukri.coms product pricing begins at Rs. 500 for a classified single listing. Its longer-term products like hotjobs start at Rs. 27,000 for three months. The size
NAUKRI.COM

Markides, C C (2000). All the Right Moves, Boston: Harvard Business School Press.

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of the average annual revenue per client seems to suggest that naukri.com gets its revenues from a few high value clients and many low value clients who are with the firm for relatively short periods of time. This strategy, which might have emerged over time, is very resource-intensive in terms of manpower and advertising support and results in high client acquisition and renewal costs. naukri.com needs to reduce resource use in client acquisition as it moves forward. It needs to acquire clients who will transact with the firm on a longer-term basis. It also needs more clients who use naukri.coms higher priced products such as the top employer and the best places to work. In order to develop high value clients, naukri.com needs to follow a key account strategy. This strategy will require the dedication of welltrained, sufficiently senior level sales persons to major clients. The key account executives or managers would be responsible for all client acquisition and servicing activities and would need to be supported within naukri.com by a cross-functional, cross-geography team. The implementation of a key account strategy aimed at developing high value, long-term client relationships will reduce the uncertainty in revenues while simultaneously increasing value to key clients. To acquire the right kinds of clients, naukri.com must review its value creation process. Currently, naukri.com creates value for both job providers (companies, consultants, non-profits) and job seekers. It creates value for its corporate clients by providing high visibility on the website at low cost for organizations and the jobs they advertise. It also creates value by aiding clients in the recruitment process by providing an instant access and opportunity to search through a huge database of resumes; filter, screen, and shortlist applications using its proprietary technology; and inform relevant applicants via e-mail. These activities speed up the recruitment process and reduce cost and effort for clients. Organizations that wish to cast a wide geographical net as far as applicants are concerned, those which recruit often or at short notice, those who are looking for internet-savvy employees, those who are concerned with recruitment costs and time, and those who are comfortable with working in an online environment will find value in naukri.coms offerings. This is a pretty diffused group and naukri.com can review its current client list and draw up an ideal client profile to help focus future sales efforts.
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For job seekers, naukri.com creates value by providing an online source of information on a large number of jobs; providing an opportunity to log in a CV into the firms database; sending alerts if there is a profile match; and providing a possibility of applying for jobs or to consultants online thus saving time, money, and effort. naukri.com provides some of these services free but others are chargeable. It can explore its current paying job seekers list and also develop an ideal client profile for this category. In order to continue creating high value for corporate clients through visibility of job advertisements on its site, naukri.com must retain and increase its rank on traffic as measured by alexa.com. This will increase the value of advertising space on its website and aid the firm in improving value capture from clients. Currently, naukri.com is ahead of its Indian competitors on parameters like reach, page views, speed, and other sites linked to its home page. The company can invest in improving the way in which job providers can transact on the site itself. Many companies, notably Dell Computers, have been quite successful with a direct sales model that makes extensive use of the Internet in the transaction process. naukri.com must also persevere with its efforts to improve the functionality and navigability of its site and make it easier for job seekers to use the site. This will help it to attract more CVs and improve the sites attractiveness to job providers.

PRODUCTS AND PRICING

naukri.coms pricing for job posting of the classified variety is lower than that quoted by monsterindia and jobsahead. This is surprising considering that it is ahead on most of alexa.coms traffic parameters. There is scope for increasing prices here and bringing them up to competitive levels since competition is currently focusing more on the resume database product. naukri.com can also raise pricing on its unique products like best places to work and job gallery since these areas are prime real estate areas on the naukri.com website. As far as the pricing of the RESDEX product is concerned, naukri.com should wait and watch its competitors moves. Currently, its resume database is smaller compared to monsterindia and jobsahead combined but its database is growing faster. naukri.com can move prices upward either when the competitor does so or as

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the size of its resume database increases. It may like to keep the RESDEX pricing below that of monsterindia and jobsahead combined for competitive reasons. Exhibit 8 of the case indicates that the firm has a marketing department. The case does not, however, provide details of the responsibilities and activities of the marketing department. A reference to new product development (p 122 of the case), and a perusal of Exhibit 5 in the case suggests that marketing may be involved with new product development, advertising, and promotional activity. naukri.com would benefit from creating a product management team that will manage its key products and create new products for the future. The product management team could focus on promoting the assigned products and helping the salesforce in communicating product benefits. naukri.coms job posting and visibility related products have been around for a while. The company can benefit from structuring them so that there is an orderly progression in value offered and pricing for each product in the range. At the top of the range, the top employer product provides prominent panel listing on naukri.coms site and is currently being sold at Rs.1.2 million per year. This product needs to be gold standard. Its features will ideally include access to resume database, free use of the E-apps software, unlimited job postings during the year, and provision of alerts to job seekers. The remaining products can also be structured accordingly. naukri.com also needs to structure its products aimed at the job seekers. These products must be promoted through its website and media campaigns. The product management team can also be assigned the task of creating new products aimed at the job seekers.

Table 1: Sales Targets

Rs. million 2001 Print + Online market size Print market size Online market size naukri.coms sales naukri.coms market share (%) 2003 5,600 5,200 400 196.5 2004 6,250 5,500 750 400 2005 6,900 5,900 1,000 535 2006 2007

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7,450 8,0009,000 6,200 6,500 1,250 1,5002,500 670 8001,350 53.5 53.5

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53.5

Table 2: Targets for Key Products and Accounts for 2005-06

Number of Annual Accounts Revenue per Account (Rs.) Panel listings Great places to work Job gallery Hot jobs Placement consultants Other job posting accounts RESDEX (upgrades and new) Resume services (new) New accounts (20 job posting + resume access for 21 days Total 30 150 100 750 500 5,000 1,800 20,000 5,000 1,200,000 500,000 250,000 80,000 80,000 10,000 100,000 1,000 Annual Revenue from Product (Rs.) 36,000,000 75,000,000 25,000,000 60,000,000 40,000,000 50,000,000 180,000,000 20,000,000

10,000 50,000,000 536,000,000

Salesforce Issues
naukri.com has made use of a direct salesforce to ramp up its sales. The sales strategy has involved developing representative offices in the new cities and increasing salesforce size in the existing offices. The salesforce size grew from 44 in 2001-02 to 170 in 2004-05 (factor of 3.86). The annual income from operations per salesperson is slated to grow from Rs. 825,815 to Rs. 2,352,941 during the same period (factor of 2.85). The overall income from operations grew by about 11 times during the period. Expenses related to salespersons compensation alone, i.e., salary and incentives, are slated to grow from Rs. 6,108,014 in 2001-02 to Rs. 50,500,000 in 2004-05 (factor of 8.26) as shown in Table 3. If we include the other costs associated with the salesforce such as reimbursement of transportation and mobile phone expenses and the costs of the branch offices, it would appear that naukri. coms sales growth has come at a relatively high cost. An analysis of Exhibit 4 of the case suggests that the office with the highest productivity in 2003-04 was Delhi which managed to get an annual revenue of

GETTING THE BUSINESS

Sales Goals
naukri.com is the leader in the online recruitment market. It must focus on maintaining its market share and growing at least in line with the market. A proposed set of annual sales targets until 2007 is shown in Table 1. If naukri.com puts in place a key account management system, increases prices of some of its unique products, and develops products for job seekers as suggested above, it can plan its sales for future years at the level of products and customers as shown in Table 2.

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Rs. 1,817,391 per salesperson. It seems that, in 2004-05, naukri.com will succeed in stepping up the national average of revenue per salesperson to Rs. 2,352,941, a level which is about 29 per cent higher than the best performing office of 2003-04. The case indicates that naukri.coms compensation scheme for salesforce consists of a base salary and incentives for target achievement. The remarkable sales growth and substantial increase in the salesforce productivity in 2004-05 is most probably being achieved through higher incentive payments. Table 3 shows that incentives will reach 98 per cent of the base salary for the salesforce as a whole in 2004-05. Although this may be very attractive from the individual salespersons point of view, this kind of incentive-led growth would not be sustainable for naukri.com in the long run. naukri.coms incentive scheme for salespersons is simple in concept and easy to operate. It is based on the achievement of specified value targets and incentives start at the base level of targeted value sales. There are, however, no criteria relating to the sales of specific products or acquisition of new clients. The incentive structure as it exists influences salespeople to focus effort on low hanging fruit by concentrating on easy to sell products and spending more time with existing clients rather than on pushing the higher value products or developing new clients. An analysis of Exhibit 9 in the case suggests that over a six-month period, about 43 per cent of the revenues for a particular salesperson came from renewals and upgrades. Under the current incentive structure, the company is overpaying for repeat business. Another issue regarding incentives is that the incentives are paid out on a monthly or a quarterly basis. The management does not have any discretionary rewards for consistent performance over an annual horizon or for rewarding notable inputs, team efforts, etc. This issue may be considered when designing the comTable 3: Sales Force Size and Expenses

pensation plan in the future. Going forward, naukri.com must undertake a compensation review to benchmark its current compensation with firms in its own industry and with firms in related industries. It may decide to pay slightly higher than comparable jobs in benchmark firms in order to recruit and retain quality salespersons. It must also change the structure of the compensation package. The compensation structure for sales positions involving new business development can contain a greater portion of incentive vis-a-vis salary. Account management positions which have a higher servicing requirement can be compensated with a higher salary component and a smaller incentive component. The compensation plan may be structured as a mix of salary, incentives, and bonus instead of just salary and incentives. The actual proportion of each component can be decided depending upon the position and the main responsibilities of the concerned salespersons. The incentive portion could be designed to provide a smaller reward percentage for renewals (say 1%), a slightly higher level for upgrades (say 2%), and a higher level for new business (say 3-5%). There could be differential incentives for the existing and new products, lower value and higher value products, short-term and longer-term acquisitions, etc., reflecting different degrees of difficulty and company priorities. naukri.com must signal its commitment to a new sales strategy by freezing recruitment in the existing offices. Recruitment must be undertaken only for new offices being set up, that too when existing salespersons cannot be relocated. It must institute the key account management philosophy as soon as the compensation review and the new compensation plan are ready. The key account strategy may release some salespersons from their existing territories or accounts. These salespersons could be reassigned to developing new clients or to business development in other businesses that

2001-02 Salespersons (number) Income from operations (Rs.) Sales per salesperson Annual salary per salesperson (Rs.) Yoy growth (%) Salary expense (Rs.) 1x4 Sales incentives and commissions (Rs.) (Exhibit 5 of the case) Salesperson salary + Incentives (Rs.) 6+7 Average salary + incentive cost per salesperson (Rs.) 8/1 Incentive as % of base salary 7/6 x 100
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2002-03 110 89,129,052 810,264 136,000 5 14,960,000 6,554,792 21,514,792 195,598 43.8

2003-04 158 196,515,493 1,243,768 142,857 5 22,571,406 16,692,945 39,263,451 248,509 74.0

2004-05 170 400,000,000 2,352,941 150,000 5 25,500,000 25,000,000 50,500,000 297,050 98

44 36,335,888 825,815 129,575 5,701,300 406,714 6,108,014 138,819 7.1

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naukri.com may undertake in the future. The case does not discuss sales training specifically. A well-designed sales training programme can deliver many benefits like increased productivity, reduced attrition, improved customer relations, better morale, and improved time and territory efficiency. naukri.com should invest in sales training at all levels. Topics like sales funnel, prioritization of opportunities, buying centre, etc., need to be covered. The company should develop a system of capturing and evaluating customer contacts and customer data online. A web-based salesforce automation system will be useful in improving productivity. monsterindia appears to be running a successful telesales operation. Although there is no need for naukri.com to jettison its field force and move towards telesales, it may benefit from positioning telesales executives in its major offices. The telesales executives could handle customer queries, carry out prospecting, hand over leads to the salesforce and pursue renewals. Telesales can, therefore, help in improving the productivity of the salesforce.

advertising business. Advertisings role in this context may be considered as providing support to the field force. This role may be also be performed by direct mail, e-mail, events, exhibitions, and telesales. naukri.com must critically evaluate the role of advertising in generating business by analysing customer information. Going forward, advertising may have another important role building awareness of naukri.com brand among the investing public in case the firm decides to go in for an IPO.

COMPETITION
According to Porter (1996),3 competitive strategy rests on unique activities. The heart of competitive strategy is being different and deliberately choosing a different set of activities to deliver a unique mix of value. On the surface it would appear that naukri.com and monsterindia perform similar activities. Both utilize their websites and resume database to garner revenue from customers. At a deeper level, however, naukri.coms activities are different not only from monsterindia but also from its other competitors. naukri.coms revenue generation model is based on a field salesforce operating out of many offices in Indias major cities. The primary products that have historically been promoted are its job posting services although, in recent times, it has also started emphasizing its RESDEX database. The salesforce has successfully achieved challenging sales targets and has delivered consistent growth. Salespersons are well compensated and have opportunities for growth within the company. naukri.com has created a popular website that attracts considerable and growing traffic. The website has clearly demarcated areas for the companys major products. naukri.coms name has a good match with the Indian psyche. It has done a significant bit of advertising in comparison with its resources and size. It has not specialized in any single sector of the economy like IT, etc. It has good contacts with leading placement agencies. The company has a unique professional culture due to the impeccable academic credentials of its founder, board, and senior executives. naukri.com is an entrepreneurial firm, and therefore, it has substantial flexibility in diversifying into other product categories. Given its unique profile, naukri.com has quite a few

Advertising
Advertising has helped naukri.com increase its resume capture rate and increase traffic to its website. Online and TV advertising have delivered CVs at relatively lower costs compared to print but it still costs naukri.com between Rs. 40-50 to acquire a CV using these media. Currently, naukri.com is not realizing enough revenues from job seekers to cover CV acquisition costs and this activity is being subsidized by the revenue from job posting and resume database products. The company must investigate ways in which it can reduce CV acquisition costs even more. Considering that many English speaking, computer literate individuals are also exposed to non-English media, naukri.com may benefit from experimenting with advertising on national network, Hindi, and other regional language TV channels. These channels offer substantially higher reach and TRPs compared to English TV channels. naukri.com can supplement advertising efforts by launching a referral programme in which registered job seekers can bring in new CVs. Advertising has other roles to play in naukri.coms growth. It has probably helped in introducing the salesforce and building credibility among the corporate clients but it is not very clear whether advertising has directly attracted corporate job posting and online

Porter, M E (1996). What is Strategy? Harvard Business Review, 74(6), 6178. NAUKRI.COM

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competitive advantages. It must sustain these advantages through continued experimentation. To keep growing, it must focus on providing unmatched service to

its clients at a reasonable cost. This will really differentiate it in the marketplace and make it hard for competitors to imitate the company.

Case Analysis II
Pingali Venugopal Dean and Professor of Marketing XLRI, Jamshedpur

anjeev Bikhchandani should first understand the market he is in. He should realize that naukri.com is not just in the business of online recruitment advertising, it is, in fact, in the business of providing a match between the job seeker (who is looking for a career) and the employer (who is looking for the right candidate) using an online medium. Thus, naukri.com is in the market of recruitment advertising (advertising that communicates the availability of a position or a job designed to recruit staff of any kind).

MARKET STRUCTURE
The alternative modes of recruitment advertisement are print medium, HR consultants, referrals, online corporate web, and campus recruitment. In India, print medium has the highest market share (accounting for Rs. 5.2 billion in 2003 out of a total of Rs. 5.6 billion of recruitment advertising)a situation similar to that of the US in 1999. In the US, revenues from online advertising were just $105 million in 1999, little over 1 per cent of the total recruitment advertising market. However, that grew to almost 20 per cent of the total in less than five years by cutting into the print budgets. By January 2005, 96 per cent of the Fortune 500 companies had used some sort of online recruitment process 1 and online advertising is predicted to exceed $16 billion by 2008, adding more than $10 billion to the industrys total revenues as on January 2005. The Newspaper Association of America and the Forrester Research also stated that print advertising would lose approximately $5 billion per year to online recruiting. 2 A similar pattern can be expected in India if online recruiting is marketed to cut into the share of print and
1 2

other modes of recruitment advertising. Currently, however, online route is placed fourth in order of preferred job hunting modes after recruitment agencies, print, and referrals. So, while preparing the marketing programme, the company should not look at only monsterindia and jobsahead as its competitors but also other modes of recruitment advertising and focus on expanding the share of online advertising in the market of recruitment advertising. It should also focus on taking a share from the unadvertised jobs. While competition within a category may not be a major threat as job seekers and employers use more than one (well-known) brand (like companies advertising in more than one national level newspaper), naukri.com should also promote its brand as a major player in the online category by providing better value-added services.

DEFINING THE MARKETING OBJECTIVES

The company should, therefore, look at a two-fold objective for its marketing programme: Increase site traffic by gaining mindshare. That is, the company should ensure that the naukri.com site has a high recall and is considered first for recruitment advertising not just as an alternative amongst other online sites. Increase resume data base (RESDEX) services contribution to total revenues from 40 per cent to 80 per cent. Currently, 95 per cent of the naukri.com revenues come from employers who put advertisements or get resume-related services and only 40 per cent come from RESDEX services. The company should increase the share of revenues from valueadded services such as data-based services to 80 per cent (jobsahead and monsterindia derive around 80% of their revenues from RESDEX services).

http://www.mindbranch.com/listing/product/R560-0284.html http://www.careerjournal.com/hrcenter/weddlesguide/19990913-weddle.html

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DEVELOPING THE MARKETING PLAN

The product has a great opportunity that it could encash. Though the reach for print is currently very high (2.5 million subscribers and 12.5 million readers as against 4.5 million Internet accounts as on March 31, 2004), the fixed line Internet users are expected to reach 15 million users by 2007 with an estimated 25 per cent of them looking for jobs online. While the software industry has been the biggest user till now (23% being from software, BPO, ITes hardware, and networking), there is a tremendous opportunity for expansion in other industries. And, to encash on the opportunities, naukri.com has the requisite strengths: It provides the job seeker with better experience. It provides convenience as it allows an individual to send the CV in word format instead of having to enter the information on the online format. It enables usage of different CV profiles for different jobs. It helps in better navigation and provides improved features with a view to optimize the time spent online. It allows the job seekers to see how many times recruiters have accessed their CV. naukri.com also provides good service to the recruiters: A survey has shown that around 66 per cent were satisfied or very satisfied from the services of naukri.com. The services are cheaper. Online advertising is 80 per cent cheaper (print advertising costs Rs. 25,000 to Rs. 0.1 million as against Rs. 1,500 for online advertising). Online advertising takes less time for processing as compared to print. The recruitment cycle of candidates has been reduced from 90 days to 28 days in the US. Online advertising has around 60 per cent conversion of advertisements to jobs offered.

Despite low Internet penetration, online recruitment in India could pick up momentum due to speed and cost benefits. It facilitates just-in-time hiring. When an organization needs a candidate, it can access the database of job portals and screen resumes. It can also shortlist people based on skills, location, salary, and availability. Organizations have cut costs by almost 80 per cent over traditional recruitment modes by moving over to the online recruitment process. The product could, therefore, be differentiated from the other recruitment advertising modes (both for job seekers and recruiters) as an option that would be very convenient and cheap. On this positioning platform (Table 1), online recruitment would be better than print medium, HR consultants, and campus recruitment. However, on this positioning platform, online recruitment advertising and referrals provide similar benefits. So, for differentiating on-line medium from referrals, a third dimension, the number of options available, could be added. The positioning statement could, therefore, be a cheap and a very convenient option to choose from several job offers/job seekers. Marketing has to also address the weaknesses. The e-Apps offerings of naukri.com were not popular with the recruiters as they did not provide appropriate screened applicants. Confidentiality of the applicants could also be a weakness. The technology should be modified to address these weaknesses.

ROLE OF ADVERTISING AND SALESFORCE

Another issue that has been bothering Bikhchandani was whether salesforce would continue to be the main driver of business generation as it had been since 2001, or was the naukri.com brand strong enough to generate business without a proportionate growth in the salesforce? A customer-oriented strategy should identify the role of salespeople and advertising and assign only those activities that can be performed by the salespeople in a cost-effective manner and allow advertising to carry out activities that it can perform in a more cost-effective manner. To identify the roles of advertising and salesforce,
Table 1: Positioning of Alternate Modes of Recruitment Advertising
Dimensions Cumbersome Convenient Cheaper Online sites of companies Referrals Online recruitment sites Costly Print medium HR consultants

TARGETING AND POSITIONING

Although e-recruitment caters to jobs at all levels, it is largely useful in exploring people at entry and mid-tier levels. 3 As the base of candidates looking for these positions is very huge, the online recruitment process should target this segment.
3

http://www.expresscomputeronline.com/20050418/technologylife01.shtml

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the company has to look at the buying behaviour and see how salesforce and advertising can help the consumer make the decision. Table 2 identifies the major stages of the decision process for the job seeker and the recruiter. From the table it can be seen that advertising should be used for job seekers as it helps create awareness and trial (TV advertising had shown immediate impact in the US. Within 24 hours, after airing an advertising spot on the super bowl, searches on monsters site increased by 450%). The company should use reminder advertising (through TV) to gain mindshare and informative advertising (through print media) to provide information to the job seekers. The companys salesforce would be important for recruiters as they would need to be convinced about the services offered by naukri.com through demonstrations.

CONTROL AND MOTIVATION OF THE SALESFORCE

Currently, the functions of salesforce were business development, pre-and post-sale services, and relationship management. However, as the incentives were determined by the sales made, the focus of the salesforce
Table 2: Decision Process for Recruitment Advertising
Job Seeker Need Interest generated by Credible information source Effective option for promoting sales Convenience (better experience). Appropriate job alerts.

was more on the existing customers and less on the new customers. (Currently, the salesforce made three to four sales calls a day and around 65 calls a month 70% of the calls being for renewal accounts.) As the focus of the marketing objective is towards category building, the focus of the salesforce should be more towards market development (identifying new accounts) and, therefore, the evaluation and compensation plan should be in tune with that objective. The targets of the salesforce should include the number of new accounts apart from just sales value. The incentives should be based not only on the total sales but on a weighted index of (a) the number of new accounts, (b) the sales from the new accounts, and (c) total sales. Since the effort of market development may not always reflect in immediate sale, the company should also provide annual productivity bonus to all salespersons. Thus, an appropriate marketing plan and incentive structure for the salesforce would ensure that the sales effort is directed towards the marketing objective and help the company expand the market rather than compete with monsterindia and jobsahead for a share in a smaller pie (volume of online advertising).

Recruiter Better screening of applicants. Personal contact and demonstrations. Company salesforce. Sales would be generated if the recruiters are convinced about the quality of applicants and the ease with which they can select their required candidate. This would be best done by the company salesforce.

Experience of others (word of mouth). Friends. While salesforce could be used to generate the initial sales prior to the spread of message by word of mouth, the problem would be with respect to confidentiality. The jobseekers would not like to be seen with a recruiting company salesforce. Thus, the option that has to be used would be advertising to create awareness and trial.

Case Analysis III

Salma Ahmed Faculty Faculty of Management Studies and Research AMU, Aligarh e-mail: salmaahmed6@rediffmail.com Ashfaque Khan Executive, Red Hat India New Delhi e-mail: akhan@redhat.com

aukri.com, a pioneering online recruitment agency in India, is faced with the threat of competition from monsterindia as it took over jobsahead as a part of its strategy for growth. A swot analysis of the
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company reveals the following:

STRENGTHS
naukri.com has the first mover advantage. It was

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a forerunner in ushering in the change in the way Indians looked at job hunting. Its nomenclature has received acceptance among Indians. It has the experience and learning of being in the market for almost a decade. It has a large market share of 50 per cent while monsterindia had 9 per cent and jobsahead 32 per cent. It ranked as Indias number one job site on all parameters page view, reach, and traffic. It has the advantage of an interactive and simple site design which has ensured loyalty amongst clients. It has the advantage of a clear revenue model since its inception. While it has a few services that are free to both job seekers and job providers, the majority of their services are paid for by the recruiters. It has a very committed CEO and a marketing and sales team. This is clear from the visits made by them to establish contact.

THREATS
It faces a major threat from the merged entity monsterindia with combined strength and a larger traffic. There are some micro and macro levels issues to be dealt with.

MICRO ISSUES
HR-related Issues
Top management involvement goes a long way in boosting the performance of a company. It has a very committed CEO; even the marketing and the sales head spend days on the road, meeting clients and making deals. The top management should try to control the high level of attrition at the entry level. It should identify the strengths of a person and chalk out a career path for him. In this way, the level of commitment even among an entry-level employee can be enhanced and the rate of attrition controlled. The CEO should use not only monetary but also non-monetary incentives to make his team as committed as the team of 16 that he had earlier. Further, the high cost of sales management is also an issue that needs to be tackled and the company would have to adopt cost-cutting measures.

WEAKNESSES
It has a large number of employees 280 while its present competitor has barely 200 plus employees. A large number of the employees 170 of the total strengthare engaged in sales. The company incurs a high cost for managing salesforce (48% of the total cost). There is a high level of attrition.

Marketing-related Issues
Unlike others, initially, the company kept a tight control on the advertisement expenses. It is said that an average retailer spends 5-8 per cent, an average manufacturer 15-18 per cent, and the dot coms more than 25 per cent of their revenues on promotion. Instead, naukri.com used PR, viral marketing, events, and to some extent the press to build its brand. To its advantage, it was often quoted as the first online recruitment company in India. Alliances with media partners like HT Careers, Headstart, Deccan Chronicle, Business Today, and Tribune gave the company a lot of visibility. In fact, print gives a company an opportunity to communicate in a more relevant way beyond simple reaching eyeballs. But, now, to leverage the first mover advantage and also to combat the new competition, it may need to invest heavily in promotion activities. If a competitor offers the consumer more value, it is a fact difficult to hide particularly in a net world. Therefore, pricing and the value that naukri.com offers to its customers in terms of the right job at the right time to the right customer is very important.
NAUKRI.COM

OPPORTUNITIES
Internet users are increasing day by day. Approximately, 7.5 million urban Indians are using the net. Further, with broadband infrastructure being rolled out, there are more opportunities on the net. The scope of online recruitment is, therefore, increasing. Like any other online recruitment company, it has the advantage of being a low cost medium of recruitment; it also cuts recruitment cycle time drastically. The recruitment market is booming and it can be said that the job market is one of the best in recent years. The online opportunity for hiring in India is growing at 80-90 per cent each year.

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MACRO ISSUES
At the macro level, the issues to be dealt with and the strategies to be adopted are as follows:

Client Base in Specific Sectors

A sector analysis reveals that the largest users in the online recruitment market are the software industry and other IT related areas like ITes, hardware, and networking. Further, sectors which expect to boom are retail, insurance, telecom, and hospitality. Healthcare, training, and consulting have also picked up momentum. naukri.com should increase the client base in these sectors.

Acquisition Strategy
Acquisition of jobsahead by monsterindia has been a part of the latters strategy for growth as it had acquired four companies including jobsahead. The others were military.com and Tinkle.com in the US and jobsahead in Pan Europe. Monsterindia is planning to strengthen its offering in IT as jobsahead was a leading player providing recriutment in the space of IT. naukri.com can also review the existing players and adopt the acquisition route. However, it should select the company and also work out the valuation very carefully. The other option could be to go to the public market through an IPO.

Online and offline model: On a stand-alone basis, the online system must have a large number of users and corporate clients to survive. Only a few players have that model. So, naukri.com should move towards a more mature model where offline activities complement the online presence. Recruitment essentially includes activities like resume search, profile matching, screening of applications, shortlisting of candidates, counselling, client-servicing, and replacement. While resume searching and profile matching are done online through a jobsite, the remaining activities can be done offline through a head-hunting firm. Therefore, there is a need for good custom support services through offline presence for an online model to survive and prosper. There are other avenues which the company could explore for increasing the traffic and market share such as: organizing job fairs in different metros voice-assisted sales and registration over the phone expanding to other Asian markets. Presently, there is a boom in the job market which has also led to online recruitment growing at a fast pace. With the emergence of newer companies which are merging to become stronger, there is increasing competition. A company which offers greater value for its clients in terms of ease of use, reach, and satisfaction will finally emerge the winner.

Case Analysis IV
Manmohan Rahul Assistant Professor Ansal Institute of Technology Gurgaon e-mail: mmrahul152@yahoo.com Shalini Rahul FPM Scholar Management Development Institute Gurgaon e-mail: shalrahul@rediffmail.com 400 million, naukri.com is now a company which has all the potential to grow and compete with other companies in the same domain. The case presents the dilemma of a man who has nurtured a company singlehandedly, operating in an environment (Internet) which is virtual and which has, within a span of ten years, gone bust twice despite its phenomenal usage and exponential growth rate worldwide. Today, naukri.com needs to segment its customer base and position itself to get a competitive advantage in the growing competition and then reap the benefits. Before that, a quick SWOT analysis of naukri.com will help to ascertain the route that

rom a humble beginning, Bikhchandani has turned into a successful manager and an entrepreneur creating an online recruitment service domain in India that has tremendous value to offer and has enough potential to chart a voyage yet undiscovered. The challenge before Bikhchandani is to sustain and grow in the presence of financially and technically sound companies that are ruthless in destroying their competitors. From an initial beginning as a job listing web page to a full-fledged online recruitment company that has a database of more than 2.5 million resumes, more than 1,500 corporate clients, and a projected revenue of Rs.
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Bikhchandani may wish to ponder upon or even like to take.

STRENGTHS
It has the first mover advantage in the online recruitment services in India. It is well complemented by the association of its partner Quadrangle which is an offline executive search firm. In this way, it is better equipped to capture the job market at the higher end as well as the fresh job aspirants. The company has got a generic name that is commonly used in India and chances are that high name recall (naukri, which means job) among people may result into more web hits on the naukri.com site. The salesforce is dedicated and is responsible for increasing the revenues of the company. From the exhibits it is clear that the salesforce is successful in getting new clients and is able to sustain the older ones by giving them pre-and post-sales services. Despite its growing success, it is still lagging behind the other companies in terms of innovation and tieups. Tie-ups can be of important strategic value in online recruitment services. The company has to decrease the attrition rate in salesforce as the cost of losing an experienced and trained sales executive can hinder its growth path. Its dependency on the salesforce is high. Looking at the online recruitment statistics of the last two years, it can be projected that these services are here to stay. Since naukri.com has successfully created a name for itself, it can thrive on it. Business diversification like jeevansaathi.com (online matrimonial web service) can add to naukri.coms sustainability and magnitude of the operations. There are nearly 1,000 AICTE approved business schools and engineering colleges (privately owned and university-managed) that have sprung up in the last ten years with an estimated revenue of nearly Rs. 1 billion. There are thousands of students graduating from these institutions every year with virtually no campus recruitment. naukri.com can tap this market and start the process of tying up with the owners of these institutions who are under pressure to provide a suitable job opening to these students

besides providing them with services like resume writing in a structured manner. Direct contact with the students can also be made in the early stages while they are undergoing their studies.

THREATS
Looking at such a successful business model created by online recruitment agencies, chances are that many more potential competitors may gain entry into the market. The potential entrants can be newspaper and magazine houses like The Times of India starting with timesjob since they are flushed with money and also have an experienced workforce to create the required structure. It is quite possible that any one of the players may also provide value-added services to clients like conducting preliminary interviews, etc. Sabotaging the existing clients of naukri.com by its competitors as done by monster.com recently and luring them with more listing and other value-added services at slightly more premium can have a longterm negative impact. While this issue can be tackled out by naukri.com, if it continues, it may result in erosion of market power and loss of customer confidence.

WEAKNESSES

OPPORTUNITIES

Size does matter and naukri.coms financial base and operation magnitude are still much smaller when compared to its main rivals. The business is configured optimally for the next growth phase and unless there is turbulence in the market, all naukri.com needs to do is continue using its nurtured source of advantage which more or less seems to be its salesforce along with its technical team. The value in the minds of the clients of naukri.com portal is higher as compared to other online recruitment sites. The company needs to maintain a balance between advertisement budget and the issue of having more salesforce with their monetary incentives. In no way can the company reduce its salesforce for another two years unless it is established that the market dynamics is changing and the workforce is becoming redundant. Also, looking at its competitors, it is suggested that naukri.com should start looking for a strategic alliance with a business house/company that can supplement naukri.coms operations financially. The need of the hour for naukri.com is to expand, advertise, and also increase its salesforce to capture the market that are either emerging or are left out.
NAUKRI.COM

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Case Analysis V
Jitendra K Das Professor, Marketing Area Indian Institute of Management, Lucknow

he five issues (or questions) being pondered over by Bikhchandani at the end of the case are:

Is salesforce still the driver of business? What changes in the salesforce compensation, incentives, monitoring, control, etc. can be made? What difference would the customization of naukri.com (such as the RESDEX) make on the bottom line? How should the pricing tactics of monsterindia offering 10 per cent off on naukri.coms price to naukri.com clients be tackled? How to deal with competition? These questions can be better understood if the following issues are addressed: Salesforce compensation issues when a traditional ongoing business goes online that may be dependent on the proportionate increase in online business. Contrast promotion strategy in an online business versus traditional business. Webpage design issues (fixed vs. dynamic vs. individualized). How to acquire new job seekers. How to make job seekers visit the webpage again and again. Meaning of loyalty in the online business.

said that it has a mix of online and offline initiatives. Since market is growing and naukri.coms market share has grown at a healthy pace, it has not had any reason to feel concerned. But, all this may change with competitors taking aggressive postures. For a better understanding of the business and for working out a possible winning strategy, naukri.com should take a closer look at the stakeholders and their objectives. There are four types of stakeholders. Their objectives are shown in Table 1.

Successful Initiatives of naukri.com

The resume service for the job seekers and the RESDEX feature indicates that naukri.com has actively tried and succeeded in providing customer-focused services. It has an effective website to facilitate what it offers and has carried out changes on the website from time to time. It has a specific focus on salesforce to get business from recruiters; and, to strengthen this, it has a salesforce incentive scheme. Essentially, through a better understanding of recruiters and job seekers, it is able to provide/ deliver benefits and values to its stakeholders and is actively looking for ways to improve these.

Important Success Factors

The first objective of an online business is to generate traffic to the website and then make sure that the visitors do business online. naukri.com had a good website and it made changes with time as indicated earlier such as including job listings on the first page. It had a salesforce to contact business clients offline to get the job listings. It also tied up with other sites for traffic increase. It did excellent public relations and later backed it up with print/TV advertisements. The incoming traffic is of job seekers. The RESDEX service is critical for sustaining the traffic as it is of great value to job seekers who post their CVs online. It can be assumed that with RESDEX service available to job seekers, the good word spreads fast about quick interviews and selection. Revenue is a surrogate indicator for website traffic considering that a known proportion of

THE CURRENT SITUATION

As of now, the revenue, profit, and market share of naukri.com are growing. Its major competitor monsterindia (and also jobsahead) has not done any damage to naukri.com. The organization structure of naukri.com is more in tune with the traditional salesforce-oriented organization with hierarchies in place. An online business must have an internal environment that is tuned to provide prompt response to customers and that may mean immediate decision-making which a hierarchical organization may find difficult to do. However, naukri.com has so far not experienced any difficulty on this count but, with growth, this may become an issue. The way business is generated by naukri.com, it can be
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Table 1: Objectives of the Stakeholders

Stakeholders Recruiters Saving on cost of hiring Reduction in recruitment cycle Ease in resume search Ease in profile matching, screening of applications, shortlisting of candidates Replacement of lost candidates

Owners Profit Brand equity Growth in market share and customer share

Job Seekers Easy to apply and post CVs on the website Easy to get relevant job details Counselling service

Advertisers on naukri.com Website Visibility Click- throughs Increased page views

More efficiency and effectiveness in having access to a variety of recruiters and/or jobs

job seekers get the job. Therefore, there is value to both the recruiters and the job seekers.

Threats or Problems of Online Business

In an online business, the customer front of the operation is openly known and hence there is a tendency on the part of the imitators to replicate what seems to be workable and successful. Thus, naukri.com needs to be wary of copycats. Loyalty in an online environment must be carefully analysed. A job seeker visiting its website repeatedly must be considered as showing only limited loyalty as he may visit many similar websites almost simultaneously. On the other hand, recruiters may show some loyalty as there is a direct cost associated with job posting and some level of relationship may have formed with them due to the interaction the salesforce is able to create. The question that needs addressing is how to make the offer to the recruiters and the job seekers special or different from an offer from a competitor. There is also the problem of commoditization of service due to increasing competition and other service providers offering almost the same services. With customers recruiters and the job seekersbecoming aware of different online job-related services available in the market, it would become increasingly difficult to keep pace with the customer expectations on changes or improvements in website or the value propositions. The intense competition would also mean that all costs must be kept low; unless it operates efficiently, there is the danger of being priced out.

possible strengths of naukri.com in a particular region. In other words, naukri.com must actively look for its unique region-specific advantage.

Importance of Regional Presence

naukri.com must ask this question: How important is the regional presence, i.e., having offices at regional locations? An answer to this would highlight the difference in pure-play websites vs. traditional salesforcefocused business. naukri.com is having bothonline and traditionalmodels of business in operation. With time, as the profile of the recruiters changes, this mix ought to change and naukri.com should be prepared for it. Currently, naukri.com does the following to get business from recruiters: a) contacting HR managers b) meeting HR managers c) getting the job posting advertisement. Depending on how important (b) is, the need to have regional offices can be assessed. In other words, assessment could be carried out by making the entire contacts through Internet/e-mail/telephone; if meeting the HR managers or making a sales call is not essential, then the traditional style of having regional salesforce can be appropriately evaluated. From the job seekers perspective, pure-play website is not only desirable but almost essential.

Bootstrap Start-up
From the academic view point, it is useful to know what a bootstrap start-up is as mentioned in the case. The term literally means pulling yourself up by pulling your shoe strings. So, from the business perspective, a bootstrap start-up would mean that a business is initiated without any external support, or alternatively, promoters conNAUKRI.COM

Revenue Growth Region-wise

An analysis of naukri.coms revenue growth region-wise indicates that the Southern and the Eastern regions had performed better than the others. The possible causes for this trend must be explored to get an insight into the

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tribute time and financial resources.

Reasons for Excellent Growth

It is important to understand the reasons for naukri.com and other similar websites registering excellent growth. The job market existed before but naukri.com and other similar websites took initiatives to facilitate certain activities performed in this market. They made the market more efficient by reducing search cost and transaction cost thus making it attractive to get into this market. In this case, the efficiency in the market also brings in effectiveness as the cycle time to close the transaction becomes short leading to increased satisfaction. That is, when market becomes more efficient, trapped value is released which means a new revenue stream for the business organization (e.g., Amazon.com, e-bay.com). Trapped value is also released when a new value system gets created, for example, the value of a new found community of recruiters and job seekersthey existed earlier but as standalone entities.

or based on recruiters may be explored. The pros and cons of such a strategy can be looked at. These may not, however, be critical for success in an online environment if scalability is not an issue and this business is infinitely scalablelimited only by the IT infrastructure available. The key is to have fully satisfied job seekers in increasing numbers. More job seekers will make it more attractive for recruiters. That is, strategies must be developed and implemented to acquire and retain job seekers even after they have got jobs. So, job seekers satisfaction becomes the key issue. Another major issue is how to take care of the recruiters for they provide the revenue. It is interesting to note that it seems important to have strategic focus on job seekers while the revenues come from the recruiters. Building relationship with clientsthe recruiters through an understanding of their specific needs would be important. The salesforce is strategically placed to provide insights on this. The prime objective should be to build loyalty. The question is: how?

RECOMMENDATIONS
The five questions posed in the case can be seen as directions for analysis for the most important question: How to meet the owners objectives? They can be broadly stated as: How to defend its market share of 50 per cent? How to grow further, i.e., sustain the first mover advantage? Considering the increased competition, the question that comes naturally is whether naukri.com should be worried. Not quite, if it continues to focus on job seekers by offering services that match their needs. As an illustration, one can analyse how google.com is trying to keep its customers or for that matter any other email service provider. A segmentation strategy based on job seekers and/

Critical Success Factors

For web-based business, the focus should be on: developing individuality building interactivity developing customer as co-producer delivering value. naukri.com should focus on itself as a facilitator and actively involve job seekers and recruiters in making offers to each other. Specific initiatives should be taken on salesforce compensation and assessment of its future scenario. The revenue model should be reworked to tap revenue from job seekers as well.

Specific work plan, web-based or otherwise, can be developed to achieve these critical success factors.

We cannot live only for ourselves. A thousand fibers connect us with our fellow men; and among those fibers, as sympathetic threads, our actions run as causes, and they come back to us as effects. Herman Melville
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