Business service company Quess Corp is the second largest employer in the private sector after IT services major, TCS, with about 2.5 lakh employees on its rolls. Quess has been in the news lately acquiring hiring companies such as Monster and its parent, Thomas Cook planning to rejig its operations and focus mostly on its travel business so that shareholders have direct exposure and shareholding in the staffing company. In an interaction with BusinessLine , Amitabh Jaipuria, CEO and President, Global Business Services, Quess Corp, shares the company’s future plans and the sector’s growth.
A year after Quess got listed, the company raised ₹870 crore. How much is left of that money now?
When we raised the money, we publicly said that a big chunk of the QIP proceeds will be towards acquisitions and partly to retire some debt. We have retired ₹150 crore of debt. We have deployed about ₹300-350 crore for acquisitions and have about ₹300 crore still left for further acquisitions. So Quess has been developed by Ajit Issac (CMD) and Subrata Kumar Nag (CEO) by and large as a platform. Now that platform’s capacity to invest in itself has also started quite nicely. So, by the time we use these ₹300 crore fully, the organic businesses will begin to kick in. And they will start generating cash which will then fuel our growth into the future.
You have grown through acquisitions with the latest being acquisition of job portal Monster’s business in India, SE Asia and West Asia. Will it continue to be the main strategy for growth?
We believe that acquisition is a legitimate route to growth but it is not our only route to growth. If you analyse our track record and the numbers, a clean two-third of our growth comes organically. The rest is acquisition-led. Look at it this way: Once the acquisition happens, the responsibility of growing that organically at whatever we have committed — which is 20 per cent plus annually — is with the company.
Thankfully so far, every single acquisition that we have made by and large has followed that script. We have been able to convert all of these acquisitions into high- growth acquisitions.
What kind of role does your parent, Thomas Cook, play in the company?
So, Thomas Cook is our parent company and Fairfax holding is held through Thomas Cook. At that time, they did not have an India investment vehicle. So, that is why the investment got routed through Thomas Cook. Otherwise, Thomas Cook has no part to play in our management. Apart from the fact that Madhavan Menon MD and Chairman, Thomas Cook who sits on the board as well as a Fairfax nominee.
Otherwise, Thomas Cook is a separate entity by itself and do their own thing. They are of course another part of the outsourcing business which is travel. Travel is very large also. A big chunk of their business comes from corporate. Thomas Cook is a separate story — the connection of Quess is that we are held through them and Madhavan sits on our board.
What was the rationale behind buying Monster?
If you take a step back and look at the job board market, 70-75 per cent is Naukri.com, that is the market share. They are the 900-pound gorilla in the room, the next is Monster with 20 per cent. So it is like a duopoly structure. We believe, if we can fix Monster to some extent, then it can become a strong No. 2. But, the opportunity to become much stronger is clearly there. If you look at our past acquisitions also, where we have bought assets and turned them around quite nicely. There are three-four clear rationale which sort of underpinned that acquisition. One it was available at a very good price.
If you compare it with InfoEdge, which is the parent of Naukri.com. Naukri trades at close to 17 times revenue. We have got this under one-time revenue — almost 0.6 times revenue. So, valuation was very attractive. It is a strong brand, it gives us a complete new product and geography range. We have managed to get into South East Asia through the acquisition.
I think that has worked in favour of our decision to do this deal.
Being in the staffing business, do you see major corporations hiring far less than what they do but increase in terms outsourcing?
I think the nature of employment will change and is changing as we see. As they define their core more sharply they are going to employ greater expertise for that core. So, I think that it is the skill sets that will shift. So, if their value drivers are shifting into much higher level of technology, then maybe the numbers will come down in that industry. But some other industry will pick up that slack. But the overall employment will continue to grow robustly. And even today, it’s a conundrum, it’s a riddle in some sense.
You know people talk about jobs not being there, but I'm saying that you can’t find people to work. We keep saying that if you are willing to work, without being too fussy, you will find work. What people want really are the white collar clerical jobs, those are in short of supply. If there was so much of jobless growth, by now our unemployment would have been 10-12 per cent. I mean you would have had young people on the streets, but the fact is you don’t have young people on the streets.