With more than 864 universities, 40,026 colleges and 11,669 standalone institutions, India is expected to have “the largest population of college-going students” i.e. approximately 119 Mn by 2025, according to All India Survey on Higher Education (2016-17) by the Ministry of Human Resource Development, Department of Higher Education.
The same report highlights that in 2016-17, the total college student enrolment in the country rose to 35.7 Mn from 30.2 Mn students in 2012-13.
Despite the rising enrolments, there is no proportionate growth in the employment prospects for these 35.7 Mn students once they complete their education. This was highlighted in the India Skills Report 2018, which revealed that the percentage of employable resources between the 18-25 years of age stood at 46% and 26% between the age group of 26-29.
Even though the hiring scenario for 2018 looks “positive”, hiring and employability has continued to be a major cause of worry for corporates, students as well as colleges. This is the problem where Kajal Malik, an MBA from Faculty of Management Studies saw an opportunity to bank upon.
One Problem, Three Communities: Problem Being Addressed By Reculta
During the placement drive of MBA students in the Faculty of Management Studies, Delhi, Kajal Malik and Vidyarthi Baddireddy worked for the placement committee and witnessed a “woefully outdated and manually intensive” process of campus placements. The duo took the matter in their own hands and introduced a technology intervention in the process, which led to better ‘Day Zero’ offers and median CTC.
To address this gap, Kajal Malik and Vidyarthi Baddireddy founded Reculta, an HRTech startup in January 2017. The startup is making use of automation and data analytics to simplify placement processes for the principal stakeholders in the said communities i.e. students, corporates and colleges. The team had later on-boarded Rajnish Kohli as CTO, Utsav Bhattacharjee as co-founder and Sanjeev Malladi for product management along with developers for their product.
The New Delhi-based Hrtech services startup aims to manage the workflow and activities of campus placements more effectively through automation, data analytics and cloud technology while generating actionable insights for more effective hiring and placement preparation.
Reculta founders initially started with a small working capital of $30.7K- $38.4K (INR 20-25 Lakh). And are now in the final stages of closing a seed funding round worth $61.4K (INR 40 Lakhs) from CIIE, Ahmedabad.
The startup was also the winner at the first edition of the eBay Startup Cup (India edition) in September 2017 and was awarded a grant of $10K. Earlier, it received an incubation support from Centre for Innovation Incubation and Entrepreneurship (CIIE) of IIM Ahmedabad through their EIR programme, which included financial and mentorship support. Reculta also participated in the ITS (Ideas That Scale) Accelerator programme run by Ajeet Khurana and Pranav Khanna.
What Does Reculta Solve?
In the Indian recruitment space, colleges and universities are the first option for recruiters to hire fresh talents for their companies. However, the cost of recruitment has been continuously rising, the fact that one in four graduates leave their job within two years.
On the same spectrum, students have been mostly blindsided during placement drives with no backend information. Students are found majorly dependent on the company information shared by recruitment coordinators and company representatives. Some of the major issues for the job seeking students continue to be the lack of information and data about the company, job profile, work culture, growth opportunities, etc.
While most of the colleges have been putting out “100% placement” claims, the reality has been very different. Towards achieving the same end, the placement season in the colleges have a huge responsibility over the students who are counting on major companies to choose their students. The files have been ever increasing for the corporates, colleges and students.
Talking to Inc42, Bhattacharjee briefly explained that the product-based company enables stakeholders of recruitment to “achieve their objectives more quickly, more efficiently and with reduced costs through the use of our products”.
He added that Reculta works well for companies looking to hire either in large or in small numbers. Furthermore, startups can benefit with its speed and scale in hiring at affordable rates.
Monetisation Model, Current Traction And Challenges To Overcome
Reculta offers yearly subscription-based services and also charges on the basis of feature set requirement and number of students on-boarded or hired. The average ticket size for a client is $3,077- $4,616 (INR 2-3 Lakh).
Despite being functional and monetising only for the last nine months, the company aims to reach break even and become profitable in the next three months and clock in $9,230- $10,769 (INR 6-7 Lakhs) as monthly revenues.
As the company enters its first quarter of FY 2018, the company claims to have registered 100% growth rate in Q3 to Q4 of 2017.
With 13 paying clients, including IIM Ahmedabad, FMS Delhi, IIFT, NMIMS, IMT, XIMB among others; the startup is currently in the process of onboarding law and design colleges like Symbiosis Law School and School of Planning and Architecture, while eyeing engineering colleges, which it aims to achieve in the next six months.
Bhattacharjee shared, “Our recruiter product has got very strong positive feedback from the companies (recruiters). Several of them have indicated that they want to partner with us for pilots for the upcoming placement season. These prospective client partners represent some of the biggest names in the Indian campus recruitment space.”
Some of the major challenges Reculta has been dealing with includes long sales cycle, seasonal business and competition from CRM solution providers like Zoho, Salesforce and Talisma.
To address these, Reculta is working to expand its sales funnel to ease its cash flows and at the same time, bring in more credibility and shorten its sales cycle.
The startup is also planning to add more B2C features to generate around the year revenues. Also, “we are developing a diverse portfolio of campuses with varying calendars to offset seasonality,” Bhattacharjee shared.
Another major concern for the team is competitions from CRMs and therefore, they want to “differentiate ourselves by keeping a razor sharp focus on our target segment, i.e. stakeholders involved in campus placements which means we choose to fulfil a particular need of our customers”.
Reculta: Now Focusing On Growing Niche Areas In The Broad HRTech Space With Data Analytics
Bhattacharjee shared that the startup plans to expand its college platform to thrice the clients at present, while getting at least 15-20 recruiters on board before the next placement season kicks in.
The startup is also eyeing foreign markets such as Singapore and the UK, however, the hurdles such as tighter VISA rules and increasing salaries in the Indian job market has sparked concerns around the return on investment in an international college education.
With a learned insight from foreign universities, he shared that campus placements are a fairly alien concept in most countries. Therefore, it presents itself as a huge untapped market with limitless potential which the startup wants to leverage.
Bhattacharjee said, “Our favourite comment at the end of our presentations is ‘You guys seem to have thought of everything’. Every person who sits through our presentation recognises that we want to make sure that we stay ahead of the curve through product upgrades and cutting edge features at regular intervals.”
The company plans to introduce machine learning algorithms in the near future so that the users will be able to harness the power of ML and AI for more effective decision making using Reculta.
For example, for companies Reculta will be able to predict attrition and recommend changes in evaluation matrices to achieve optimal hiring outcomes. For students, Reculta fills in the huge gap in our education system which should have been occupied by career counsellors.
Bhattacharjee believes that “these are not wishful dreams, but matter-of-facts in the near future”.
Deep Inside The Competitive Landscape Of Indian HRTech Industry
The Indian HR industry is estimated to be $6.29 Bn (INR 40,000 Cr). In the year 2017 alone, it was estimated that $2 Bn was invested in the HR technology companies globally. As per an India Skills Report, the average increase in hiring intent is about 7%-10%, compared to last year.
In the last few years, however, the industry has worn off its age-old shackles of manual processes and have resorted to the effective utilisation of technology in order to streamline the series of processes required in selecting and training the new employees.
Post the revolution brought in by job search sites such as Naukri.com, a brigade of startups catering to the needs of the HR industry has evolved. This includes names such as Belong, JobSpire, Skillate, PeopleStrong, Freshteam, Bash amongst others, who have been taking the charge in the HRTech industry.
For instance, Skillate boast of its client base, which includes MNC’s like L&T and Expedia and startups like BigBasket, HomeLane among others. It is also working with few large enterprises in BFSI, FMCG and manufacturing sectors. While another player, Edge Networks works with customers like Wipro, HCL, Virtusa and several others.
However, Reculta believes that its competition is usually from local IT vendors providing stopgap solutions to its potential clients, without any data analytics or machine learning capabilities. At the same time, the founders also believe that their product is strong enough to gain the required product-market fit and build an edge over its competitors.
The other players in the segment have been raising funds to develop their technologies and expand their services. As per Inc42 DataLabs Tech Startup Funding report 2017, 70 HRTech startups raised around $100 Mn in the period of 2014-2017.
In this space, the startups have been trying to address the issues mostly of the stakeholders by providing them access to AI and ML technologies, but with Reculta focus first comes on the basics i.e. organising the recruitment processes. As the startup continues to focus on its niches of stakeholders, the startup looks promising, however, how it escalates its growth will be largely depended on the potential in the industry and with the investors.