Assessment Factory

Close your eyes for two minutes. Think of five IT companies that would be a

on your wish list of employers. Did names like Wipro, Microsoft, Dell, Oracle

and IBM pop up? So what's the common thread that binds these IT giants

together? It's a small and relatively unknown company, MeritTrac. Who?

MeritTrac is a four-year-old company that conducts Competence Assessment and

Pre-recruitment Processing for many preferred employers. True to its name,

MeritTrac tracks the merit of candidates to assess if he or she is fit to join

some of the most high-profile names in the IT and BPO sector. Simply put, if you

want to join a Wipro or an Oracle in India, you have to get the nod from the

folks at this Bangalore-based assessment firm.

MeritTrac was conceived by Madan Padaki, an IT professional, with stints at

Wipro, Infosys and BFL Software, on an official trip to Japan. Says Padaki, who

heads Business Development at MeritTrac, "I noticed the frenzied hiring

that was going on in the IT companies and realized a business opportunity in

that." Murlidhar S, a friend of Padaki and now head of Service Delivery and

Operations, had already developed software to manage question banks of

recruitment tests for some of the larger IT companies. The duo saw a larger

potential beyond a mere software product and roped in Mohan Kannegal, who heads

Technology and Test Development, to lay the foundation of MeritTrac in August

2000.

One of MeriTrac's first customers was none other than Wipro. Pratik Kumar,

VP. HR, at Wipro was one of the first people to give his vote of confidence when

Padaki and team approached him with the concept in 2000. Wipro became MeritTrac's

first customer in October 2000. From then, there was no looking back for the

company. In December 2000, MeritTrac bagged the CustomerAsset account, now ICICI

Onesource. Currently, MeritTrac's customer profile spans Accenture, Adobe,

Cognizant, Computer associates, Dell, Google, HP, Microsoft, Oracle, Progeon,

IBM and mind you, the list does not end here.

Playing The Volumes Game



Why do we call MeritTrac an assessment company? Let's talk numbers. There

was this BPO company that that MeritTrac was servicing. They required 500

candidates a month in the third quarter of FY 04-05 - That's 2,000 approx. At

3-4% conversion rate in case of BPOs (i.e, every 3/4 out of 100 candidates were

found suitable), the MeritTrac team handled 6,000-7,000 walk-ins per center

across 14 locations, evaluated 20,000 from the master list on spoken English

skills, shortlisted 4,000 for the Abilities and Technology test phase and,

finally, sent 3,500 for interviews to the company out of which 1,500 offers were

made. That's sheer volume and this is just one BPO that we are talking about.

Team MeriTrac: (Left to right) Mohan Kannegal, director of Technology and Test Development, Madan Padaki, director of Business Development and Murlidhar S, director of Service Delivery and Operations are the architects of the future

Typically, MeritTrac screens around 1.5 lakh resumes every month and assesses

around 30,000 candidates. While the IT industry absorbed around 50 to 60

thousand fresh recruits and the BPO 125 thousand in the last calendar year, 2005

is likely to create 75 thousand new jobs in IT and 1.5 thousand in the BPO

sectors, respectively. The BPO sector is also expected to need manpower to the

tune of 1.1 million by 2008. This speaks volumes in terms of opportunity for

MeritTrac, which still happens to be the only major player in the recruitment

process outsourcing space.

Given the booming manpower requirements in the IT and BPO sector; lower

recruitment conversion rates (7-8% for the IT sector as compared to 3-4% for the

BPO sector); high attrition rates (18% is the IT industry average while it's

45% for BPOs) and dispersed talent across India, recruitment in high growth

industries like IT and BPO is becoming increasingly challenging. Outsourcing of

certain processes in the recruitment value chain is now the mantra to

efficiently scale up the recruitment process. Says Aashu Calapa, VP, HR, ICICI

OneSource, "We wanted our recruitment team to focus on sourcing and the

interview part of the selection process. That is where our competency

lies." ICICI OneSource has been a customer of MeritTrac right from the

beginning. Initially, MeritTrac only conducted tests for the BPO firm. When

ICICI OneSource decided to outsource a significant chunk of its recruitment

process, it invited proposals from various vendors. Adds a very satisfied Calapa,

"MeritTrac's offer was the best in terms of value proposition."

MeritTrac takes care of ICICI OneSource's recruitment back office and also

part of the selection process. It has screened 18,000 candidates in the second

half of 2004 for the BPO -averaging 2,500 to 3,000 candidates every month.

Says PNSV Narasimham, HR head, HP GDIC Contact Center Delivery Unit,

"The driving forces to the adoption of assessment process outsourcing

services are increased quality of hires through assessments, improved speed and

turnaround times and lower costs, over a period of time. MeritTrac set up a

dedicated assessment center for HP GDIC at Bangalore in October last year.

Started as an experiment, the center, which provides a first-hand experience of

the work environment at HP, has already assessed over 10,000 candidates for the

company. "We call this a total applicant experience," adds Narasimham.

The Assessment Center standardizes the testing processes for HP and evaluates

applicants for multiple job openings, focusing on best fit rather than

elimination. Narasimham expects the assessment center to generate higher

conversions from a particular resource pool, that will be significantly higher

than the industry average. MeritTrac plans to replicate this model and is in the

process of tying up with six companies this year.

Capturing The Assessment Funnel



Every company builds its resume bank from a variety of sources. MeritTrac's

job starts the moment the client forwards these resumes for initial screening.

Resumes are screened on the basis of parameters defined by the client,

shortlisted candidates are then scheduled for assessments and candidates who

manage to clear the assessment are scheduled for interviews. 

Assessments are broadly classified into recruitment assessments or standard

tests and custom assessments. These are further classified into four broad

areas: Communication Skills with sections in Spoken English, Listening, Written

English and Verbal Ability; Abilities Test that spans numerical problem solving

and analytical and logical reasoning skills; Domain Skills with over 120

technology tests and personality profiling tests. Each test is different and

customized further according to the sector or the customer. Says Padaki.

"The tests automatically adjust to the skill level of the candidates."

At any point of time, MeritTrac's content bank has over 35,000 questions

that are constantly updated. In addition to its in-house internal test

development team, 150 experts on various subjects from across the globe chip in

to help MeritTrac develop its tests.

So what's MeritTrac's revenue model like? Neat. It's a vanilla model

based on licence cost per candidate assessed and a variable cost per

transaction. Numerically, this can be as low as Rs 150 per BPO candidate and Rs

600-700 per IT candidate, on an average, and could vary depending on factors

like multiplicity of tests, customization and the difficulty level of the test.

It Pays To Stay Focused



If MeritTrac has managed to clock a growth rate of 300% in the last two

years, it's primarily because of the growing strategic importance of

recruitment process outsourcing. Companies are increasing looking at niche

players to offer better services. Says Padaki, "MeritTrac is an

assessment-only company and has nothing to do with either training or

staffing." It is the assessment-only factor that actually sets apart

MeritTrac from most placement companies that follow an

"assessment-also" model.

The assessment-only company is now looking beyond the Indian borders for

growth. It has recently entered Mauritius as the assessment partner to Transcend

Holdings and has already executed a set of assessments for a Mauritian

government undertaking called National Productivity & Competitive Council -

to assess people productivity in the ICT sector. MeritTrac has also tied up with

US-based Vantage Agora to launch itself in the US. Padaki estimates MeritTrac to

grow at 100-150% in the next two years and hopes to reach a turnover of Rs 45

crore by FY 06-07. That should not be too difficult for MeritTrac, given its

track record. In the meantime, let's sit back to watch the MeritTrac sun shine

brighter and wait for the next opportunity to revisit the company.

Bhaswati Chakravorty