How to Start a Recruitment Agency | 7 Crucial Steps

India is a booming market for recruitment and HR agencies. Thus, with the right business plan, marketing strategy and direction, it can be a successful business venture. 

 

The Indian market is diverse and offers opportunities to recruit candidates from all industries, sectors, and backgrounds.

 

Moreover, with an increased demand for jobs in India, there also has been a rise in the demand for recruitment agencies.

 

So, if you are one of them looking for how to start a recruitment agency, you are at the right place.

 

Step 1 - Understand the Industry and Process

 

Recruitment agencies source and recruit people having the skills, experience, and qualifications needed to fill positions in their client's organization. 

 

The first step is to understand the challenges of the Industry.

 

A recruitment agency can provide services such as:

 

• Employee search services like a platform for niche employee search.
• Job placement services in an Industry.
• Employee placement services.

 

Also, the key resource here is the large networks of applicants and expertise in identifying qualified candidates. 

 

Some recruitment agencies specialize in specific industries or professions such as engineering, teaching or hiring business development executives. 

 

Meanwhile, others recruit for particular cities such as Delhi, Mumbai or Bangalore.

 

Further, the recruitment process is as follows :

 

• Finding the right candidates for the job
• Screening potential candidates for the position
• Interviewing potential candidates and assessing their suitability for the position
• Negotiating salary and benefits with a candidate
• Preparing paperwork and contracts with a candidate

 

If you have done your research or have found your clients, then its time to register your business.

 

Step 2 - Registering the Recruitment Agency

 

Starting a recruitment agency in India is not as easy as it sounds. 

 

It requires a lot of hard work and dedication.

 

But, that could all be a waste if you do not fulfill the legal guidelines to run a recruitment agency.

 

So, start by registering your business.  

 

Registration is required when starting a new business in India. 

 

The recruitment agency can be registered as:-  

 

• Private Limited Company 
• One Person Company
• Limited Liability Partnership (LLP)
• Sole Proprietorship
• Partnership Firm

 

Most preferably, go for private limited company registration for a recruitment agency.

 

Private companies can be registered by any person who wishes to carry on commercial activity. 

 

There is no minimum share capital requirement. 

 

However, private companies are a bit rigid in their requirements of company law compliance. 

 

To know what structure you should go for, talk to an expert at StartEazy.

 

We will assist you regarding all the legal rules to start a recruitment agency in India and help you with starting your business easily.

 

Also, if you want to go for a private limited company and are worried about the compliance, we have got you covered. 

 

Our experts will guide you through all the post incorporation compliances and ensure that they are done before due dates.

 

Step 3 - Applying for Mandatory Licenses

 

The Indian government has made it mandatory for all the recruitment agencies operating in India to have a license. 

 

The license is issued by the Ministry of Labour and Employment, which is under the Government of India.

 

The license is valid for two years and you can apply for it online.

 

You can do so by submitting an application form with all the documents like proof of identity, address, PAN card details and photos of your office premises. 

 

Also, you must submit the resume of all employees who will be working at your agency.

 

Step 4 - Setting up the Office

 

The next step to starting a recruitment agency is finding a location where you can set up your office. 

 

Some popular office locations include:-

 

• Office buildings and other commercial spaces
• Commercial spaces under construction or renovating 
• Office buildings with ground-level vacancies
• Abandoned warehouses or factories
• Warehouses, factories, or other commercial spaces that are for rent 

 

However if you are a little tight on the budget, you can also go for a virtual office. You can choose a prime location like a virtual office in Connaught Place. This way you can work from home, while having a premium business address.

 

Note:- To get a commercial space with low rents, you will have to negotiate a rent amount yourself or with the help of a broker.

 

Once you have found the perfect office, you will need to get it ready for opening. 

 

For this purpose, purchase the furniture and equipment you need to start your new business.

 

Step 5 - Increase your Client Base

 

The most common question that every business owner has is “Where are my Clients”?

 

Here is the answer for recruitment agency owners:

 

• Job Posting Websites (Naukri, LinkedIn, Ladders, Monster.com etc.)
• Social Media (Search for related hashtags and directly tap the companies)
• Email Marketing
• Referrals
• Networks (Attend workshops and networking events)
• Content Marketing

 

Once you find a potential client or query, do not miss to follow up on them. This is the most common mistake that most people make and end up losing the opportunity.

 

Pitching recruitment services to clients is not an easy task. 

 

It requires a lot of convincing and strong presentation skills to convince the client that they need your services.

 

• Firstly, it is important how you present yourself to the client. You should be confident and present yourself as someone who has been successful in the past with this line of work. 
• Secondly, give them some idea of what you can do for them - how you will help them find qualified candidates for their open positions so that they can grow their business more efficiently. 
• Thirdly, tell them about your pricing structure so that you can offer them the best deal.

 

Step 6 - Preparing a Database of Potential Candidates

 

Preparing a candidate database is the most important step for any recruiter business. 

 

A recruiter needs to know who the potential candidates are and then filter them from there. 

 

It can be done by creating an online database of candidates that can be filtered by various parameters like location, education, experience, etc.

 

The recruitment process starts with a good pitch to the client. 

 

This pitch should be concise, professional, and clear enough for the candidate to get an idea of what they are going to expect.

 

It should also include a job description that is specific and detailed enough for them to understand what this role will entail.

 

Therefore, it is where you need to be creative to make your company stand out from others in the market. 

 

You can do this by detailing the company's culture and values or telling them about their benefits package - something that will make them want to join your company over others.

 

Step 7 - Recruit and Earn

 

The profit margin in the recruitment services industry is relatively high. 

 

The average profit margin of recruitment services companies is around 20%.

 

However, that depends on the following factors:- 

 

• The cost of gaining a new client is quite low. Also, the average time it takes to find a suitable candidate for an employer is around 3 months. 
• The turnover rate in this industry is high and it means that employers are constantly looking for new employees. 
• Most recruitment firms charge their clients on an hourly basis which means that they can charge more if they have to work on more complex or challenging assignments.

 

In fact, the future of recruiting services will be heavily influenced by AI and automation. 

 

AI will help recruiters to find candidates faster and automate parts of their job like screening candidates or scheduling interviews. Thus, alongside, also work on taking your business online and automating the process.

 

Tips to Start a Recruitment Agency in India

 

Here are some tips that will help you start your recruitment agency in India:- 

 

1. Do your research: A good recruiter needs to know what they are doing and thus they need to study the industry thoroughly before starting their own business.

1. Get professional: You will need to invest in hiring professionals who have experience in the field of recruitment so that you can get your business running smoothly from day one.

1. Start small: If this is your first time, it might be wise not to start with more than 10 clients at first. It will give you enough time and space to learn before expanding.