It’s not easy to pinpoint a single turning point in the evolution of India’s staffing industry story, which has now grown into a 72K crore market. Was it the first investments made by private equity firms, the entry of global staffing giants, the surge of mergers and acquisitions, or perhaps the game-changing IPOs? If we had to pick one defining moment, it would undoubtedly be the IPOs of TeamLease and Quess in 2016.
This came 16 years after private equity first dipped its toes into the Indian staffing sector. India’s rise to become the third-largest staffing market in the Asia-Pacific region, behind Japan and Australia, can largely be credited to the booming Indian economy over the last two decades. But we can’t ignore the determination of Indian entrepreneurs who navigated the complexities of a highly regulated industry. With support from private equity, IPOs, and global staffing companies, these entrepreneurs helped elevate India to one of the top 10 staffing markets worldwide.
Three key factors shaped this remarkable journey, all of which played out simultaneously, creating a fascinating story of growth and resilience.
The Entry of Global MNCs in India
The year 2000 marked a turning point as the first multinational staffing company entered India through an acquisition. Kelly Services kicked things off by acquiring BTI Consultants in an Asia-Pacific deal and establishing its presence in India. Then, in 2004, Dutch staffing giant Vedior made waves by buying Ma Foi, which sparked a wave of India-focused acquisitions.
Not long after, Adecco entered India by acquiring PeopleOne, followed by Allegis, which entered the market in 2005 through the acquisition of EASI. The same year, Manpower strengthened its position by forming a joint venture with ABC’s IT & ITES recruitment business. In 2006, Randstad entered India by acquiring Team4U. By 2008, Italian staffing company GI took a majority stake in Elixir to enter the Indian market.
As time went on, interest from Japan began to grow. In 2013, Recruit Holdings purchased the franchise operations of Stanton Chase in India. Then, in 2014, two more Japanese staffing companies entered through mergers and acquisitions: Outsourcing Inc. acquired 51% of Alps Consulting, and Japan bought 60% of New Era.
Many of the original Indian entrepreneurs benefited from these deals, with some staying on while others decided to explore new opportunities.
Global MNCs Entry – Second Wave
After MNCs first entered India, the focus shifted to scaling up and improving margins through acquisitions. The second wave of acquisitions started in 2011 when Quess bought Magna Infotech, an IT staffing company. A few months later, Manpower Group acquired a 74% stake in WDC, another IT staffing firm.
In 2016, TeamLease made several key acquisitions, including ASAP for ₹67 crores and NichePro for ₹29 crores. They continued to expand in 2017, acquiring Keystone for ₹8 crores and Evolve for ₹36 crores. In 2019, TeamLease added Eccentric for ₹28 crores and IMSI for ₹46 crores to its portfolio.
Quess, following its IPO, used acquisitions to improve its margins and enter new niches. In 2017, it took a 70% stake in Vedang Cellular for ₹40 crore, a 61% stake in Allsec for ₹270 crore, and a 51% stake in Tata Business Services for ₹153 crore.
In 2019, Japan’s en World made its second acquisition in India by getting a majority stake in IT staffing firm Future Focus for ₹81 crores.
PE Investments
Private equity (PE) firms have played a key role in the growth of India’s staffing industry from the very beginning. While large PE deals became more common in recent years, the first notable investment came in 2000. Canbank Ventures, Usha Martin Ventures, and Metdist invested ₹8 crore in Ma Foi. That same year, JP Morgan Partners made a strategic investment of $1 million for a 20% stake in PeopleOne, now known as Adecco.
In 2004, US-based New Vernon invested $10 million for a minor stake in Chennai-based Updater Services (UDS). Then, in 2008, ICICI Venture bought out New Vernon’s 40% stake in UDS for around ₹100 crore. Also, in 2008, India Equity Partners invested $8 million in Ikya (now Quess). In 2009, Gaja Capital invested ₹50 crore in TeamLease and later added more funds to its stake.
More recently, in 2017, two significant PE transactions took place. Multiples acquired a majority stake in RPO giant PeopleStrong for around ₹400 crore. That same year, Motilal Oswal Private Equity invested ₹100 crore for a minority stake in UDS. In 2018, Samara Capital, along with Goldman Sachs and Janchor Partners, acquired staffing firms Innovsource and V5 Global Services in deals worth ₹350 crore. These organizations now operate under the umbrella of First Meridian Business Services.
IPOs: A Game-Changer for India’s Staffing Industry
In 2016, TeamLease and Quess made headlines with their successful IPOs, which sparked a wave of acquisitions. A year later, SIS India, a major player in security and facility management, followed suit with its own IPO in 2017.
The IPOs of TeamLease and Quess were a turning point for the Indian staffing industry. Their attractive price-to-earnings ratios brought global attention to the sector and helped boost its image among businesses. Thanks to their steady rise in the stock market, both companies became household names.
India’s staffing industry, now worth ₹72,000 crore, still has plenty of room for growth. With staffing’s penetration in the labor market at less than 1%, outdated labor laws, and 90% of the workforce in the informal sector, the potential for change is massive. If these challenges are addressed, India could climb even higher in the global staffing market, which is valued at half a trillion dollars.
So, even after two decades of growth, it’s safe to say that India’s staffing industry’s journey is just the beginning.
