LinkedIn is changing how India works...Are you on it?

IN 2011, PURVISH DIWANJI, the then 34-year-old director of Satyajit Chemicals, a Rs 35 crore agrochemicals business based in Navi Mumbai, set up a LinkedIn page for his company. The big idea was to use LinkedIn as most people did—to recruit. As things turned out, all the applications were unsatisfactory. But in the clutter of unsuitable résumés, there was an unexpected communication from the CEO of a South African chemicals company, who wanted to buy caustic potash from India. Within a few weeks, Diwanji had a Rs 75 lakh deal worked out. Again, last January, Cropex Technologies, a Bangalore-based startup that had developed a farm management app, got in touch with Diwanji—on LinkedIn. Five months later, Diwanji partnered Cropex to market the app to farmers.
Insight: LinkedIn helps you get business.

FOUR YEARS AGO, when HCL Technologies, India’s fourth-largest IT services company, started building senior management teams in countries such as Mexico, Brazil, Poland, and the Philippines, it used LinkedIn instead of an executive search agency. That saved the company tens of thousands of dollars in recruitment fees. Naveen Narayanan, who heads global recruitment at HCL, says the company has reduced its dependence on traditional recruitment agencies, and today about half of HCL’s mid- to senior-level positions are filled through LinkedIn, a key reason why HCL’s recruitment costs came down by $500,000 (Rs 3 crore) in FY13.
Insight: LinkedIn helps cut costs.

At an internal conference of ABC Consultants, the largest and oldest Indian recruitment company, CEO Shiv Agrawal was trying to get his 50 top associates to understand the need to tweak the company’s business model to keep in step with the digital world. The team was unhappy about changing what had worked so long, till Agrawal finally asked them what they would do if they were not allowed to use LinkedIn and job sites. The associates realised that the digital space was so much a part of their world that they could not function effectively without it. Insight: LinkedIn is pushing change among recruiters.

Kanchi Chawla, AN HR professional, didn’t have a job when she moved to Dubai in December 2009 after marriage. Job boards and recruitment portals didn’t work. She finally spotted a post from Japanese electronics major Sanyo on LinkedIn. Ten days later, Chawla joined the company’s HR team. A year later, when she moved back to India, she turned to LinkedIn once again for a job, and this time she joined online travel portal ixigo. In the last three and a half years as the head of HR at ixigo, Chawla has closed a couple of senior positions through LinkedIn.
Insight: Oh yes, LinkedIn also helps you get a job.

LinkedIn never really set out to be a recruitment platform; from the time it was launched in 2003, it has always called itself a ‘professional networking site’. It’s a social media site for professionals, and claims to be the world’s largest network of its kind. It works at several different levels: At
an individual level, LinkedIn offers professionals the chance to interact and learn from each other. At an organisational level, it offers sales and marketing solutions, as well as recruitment options.

Though its biggest impact has been on hiring (55% of global revenue is from recruitment solutions, 25% comes from marketing solutions, and the remainder from subscriptions), LinkedIn sits at the intersection of technology and business processes. That realisation is driving more and more Indians to use it not just as an online Rolodex, but as a tool to assist all manner of business activity. This fits in with what LinkedIn wants: to be an intrinsic part of companies’ business models and strategic initiatives. After the U.S. (100 million), India has the highest number of LinkedIn users at 26 million. That’s nearly 19 times the number of people employed by Indian Railways, the largest employer here.

LinkedIn’s earliest clients in India were information technology giants such as HCL, TCS, Infosys, and Wipro. But, as Irfan Abdulla, head of LinkedIn India’s talent solutions business (which deals with recruitments), says, this was expected. “When we started operations in 2009, technology companies were the low-hanging fruit in terms of customer acquisition, but we never anticipated that some of the core sector firms would be early adopters,” adds Abdulla.

Today, LinkedIn has about 1,000 Indian companies that use its premium solutions for recruitments, including biggies such as Reliance Industries, Aditya Birla Group, Larsen & Toubro, and Bharti.

One of the unexpected early adopters was infrastructure major L&T, which opted for a trial subscription in 2011 and has since doubled its spending on LinkedIn. Yogi Sriram, senior vice president-corporate HR at L&T, says the group has recovered more than 100% of its initial investment; a large part of that is because “almost 85% of our talent acquisition team sources candidates for lateral recruitment through LinkedIn”. He adds that the big advantage of LinkedIn is the network effect—the ease of directly connecting with people who are part of your connections’ network. So, he says, “through our 38,000 employees on LinkedIn, we can reach a talent pool of 1.27 million across the globe”.

The way it works: As a user starts connecting with members, the network effect allows that person to directly connect with all the connections these members have. That’s how a user with just 50 or so connections on LinkedIn can reach out to over 3 million professionals through what’s called his ‘LinkedIn professional network’, which comprises his second and third degree connections.

These links are what made the Aditya Birla Group’s apparel brand Van Heusen’s LinkedIn campaign so successful. In May last year, Van Heusen launched a month-long campaign on the network, asking members to nominate the best-dressed professionals in their networks. The campaign reached 1.5 million LinkedIn users, and nearly 15,000 members were nominated. Tech news site Mashable.com rated Van Heusen’s as one of the top eight marketing campaigns in the world. LinkedIn’s power to engage the target audience impressed Bimalendu Tarafdar, general manager, Van Heusen, and the company’s spends on digital marketing have gone up five times—from 2% to 10%—in the last three years, on a marketing budget that has doubled. A good share of that goes to LinkedIn.

Its ease of use, ability to bring professionals together, and overall utility has made LinkedIn a ubiquitous presence across offices, placing it up there with enterprise resource planning (ERP) and customer relationship management (CRM), with the linkages bound to get stronger and more useful as the network effect sets in deeper. Welcome to India linked in.

At the core of LinkedIn’s monetisation is its data analytics. Simply put, LinkedIn’s talent and marketing solutions are smart and innovative ways to slice and dice the humongous pile of data that the company sits on. Ganesan Venkatasubramanian, head of engineering at LinkedIn India, says, “Increasingly we’re shifting from an intuition-based world to a data-driven one. And LinkedIn is best placed to facilitate that.”

Abdulla says that it’s possible to map the career graphs, skill sets, and cities of each LinkedIn member. So, if a company is looking to set up office in a new location, its HR head can actually figure out the skills available in that city, or can suggest an alternative city which has more people with the necessary skills.

Krishnan Chatterjee, head of strategic marketing at HCL Technologies, says, “Platforms such as Facebook help you get a demographic understanding of a customer, while a YouTube gives you an idea about their interests. On LinkedIn, you get a sense of both the demographics and the interests.”

The company now wants to take analytics to the next level globally. At a Morgan Stanley Technology, Media & Telecom Conference this March in San Francisco, California, Jeff Weiner, CEO, LinkedIn, told a packed hall that the company’s vision for the next 10 years was to develop the world’s first economic graph. Essentially, LinkedIn wants to digitally represent and map the global economy. It wants to create a digital profile for each of the 3.3 billion global workforce, how they’re linked; it wants to create a profile for every company, a digital profile of every job offered by these companies, the skills required to obtain these jobs, and where a member can obtain those skills. “Then we want to step back and let the intellectual capital, working capital, and human capital flow to where it can be best leveraged, and help lift and transform the global economy,” says Weiner. He believes LinkedIn’s 300 million members, 3.5 million company profiles, 300,000 jobs, and 3 billion endorsements representing standardised skills are already working towards that mission.

Ashutosh Gupta, head of marketing solutions at LinkedIn India, says marketing solutions rake in a quarter of LinkedIn’s revenue because of the platform’s targeting abilities—an outcome of data analytics—which is the core of LinkedIn’s value proposition to marketers.

“When you set up a profile, you tell us about yourself, where you’ve studied, where you work, where you’re based. These parameters help us target with accuracy,” says Gupta. For example, if a senior executive shows his location as Mumbai on his profile, but keeps logging in from Delhi, Bangalore, and Hong Kong every month, the system reads it as a business traveller because of his seniority. “For airlines and hotels, this is a supercritical segment,” says Gupta.

Abdulla gives the example of a Gurgaon-based client, which had been losing employees steadily. LinkedIn helped map where and why employees were moving, and the company realised that the majority had moved to a competitor with which it had a no-poach agreement in place. With the data from LinkedIn, the company was able to re-enforce the no-poach agreement, as well as put other measures in place to keep employees engaged.

Ankur Warikoo, head of APAC and emerging markets for deal site Groupon, says about 20% of Groupon India’s 14,000 strong vendor base was developed through LinkedIn, and “that 20% seems to be more important than the remaining 80%, because Linkedin’s leads are already filtered for a certain quality”. Groupon India’s entire business development team spends at least an hour on Linkedin every day, browsing through connections and making introductions. Warikoo’s confidence in LinkedIn as a networking platform got reinforced when he reached out to the customer relations head of an airline to resolve a last-minute airline ticket complication for the company’s offsite last year. “Not only did the problem get resolved, but because we kept engaging, some months ago we signed a big deal with this airline at a national level,” he says.

For all that it is doing outside of hiring, LinkedIn is still seen as a recruitment tool first, and a networking aid next. Abdulla says that the reason why LinkedIn has been successful is because it squarely addresses a key boardroom priority: talent. He quotes a PricewaterhouseCoopers study, which says 67% CEOs globally see not having the right talent as the biggest impediment to growth; in India that number is 83%.

One of LinkedIn’s advantages over other job portals is that it allows recruiters to access passive candidates, or members who’ve joined for reasons other than to seek jobs. (And that’s how some people get offered fancy jobs they swear they never applied for.)

The verdict among talent acquisition departments across industries is that LinkedIn is most effective for middle- to senior-level hires. Most HR heads using LinkedIn say it allows for a higher level of qualitative assessment compared with other recruitment portals. In the past year, Ruchi Dhawan Sharma, deputy general manager at Muthoot Finance, a non-banking financial institution, has made eight key hires through LinkedIn, including two national sales heads and a national capability building head. “The advantage of hiring through LinkedIn compared with other portals is that you can do a deep dive in terms of engaging with the candidate much before you pitch the job,” she says.

Abdulla adds that LinkedIn also makes it democratic for micro as well as small and medium enterprises to attract talent. These firms may not have institutionalised talent recruitment departments. LinkedIn helps them by giving them access to a large passive pool. (Tip: Brush up your LinkedIn page. Recruiters could be looking at it right now.)

Almost all the HR heads Fortune India spoke to said that even if they didn’t use LinkedIn’s paid memberships, they definitely used it for background checks and referrals. The key differentiator between job boards and LinkedIn is the ability to see common connections on the latter. A major complaint about résumés on job boards is that often they tend to be dressed up.

LinkedIn solves this problem because it’s primarily a network. When a member is approached by another, common connections through colleagues, ex-colleagues, classmates, and business associates show up. “Those connections make it very difficult for you to fake your achievements. Plus, for a recruiter, there’s a whole new pool of references to tap into, especially references that the candidate hasn’t listed,” says Sunil Ranjhan, senior vice president of HR at Honda Cars India.

Prabir Jha, chief HR officer at Reliance Industries, says he recently renewed the group’s LinkedIn premium subscription. “Over the last two years, LinkedIn has helped us close multiple leadership roles, which otherwise would have to be given to search firms. It is one of the best platforms for cross-border searches, niche or passive leadership talent worldwide, as well as employer branding.”

The growing importance of LinkedIn within organisations is evident from the mandate Krishna Kumar, CEO of Kochi-based search firm GreenPepper Consulting, has: He’s working towards building a three-member sales team of a small web-based firm in Kochi. “Two of these positions are called LinkedIn lead generation specialists, and they’re looking for people who will network only on LinkedIn,” says Kumar.

Creating new job profiles is an indicator of a fundamental shift that’s taking place in organisational structures. Roles are expanding to accommodate digital data-mining abilities across all functions—sales, marketing, and even HR and talent acquisition. The HR head of Volkswagen India, says, “One of the key criteria these days while hiring HR execs is how creative they are. Can they innovate? Pure experience of medieval techniques is no longer valid.”

As companies get smarter about using LinkedIn, the rules of the game are changing fast for recruitment agencies. It’s not competition that bothers Agrawal of ABC; his worry is how to stay relevant. He gives three reasons why the recruitment sector is feeling the heat: First, LinkedIn is taking away their business. “If companies traditionally hired 40% through agencies, that number is down to 20% across sectors. At some IT companies, it’s down to zero,” says Agrawal.

Then, companies tend to fill up the more straightforward positions themselves and outsource the complex ones to agencies. “If the mix of easy- and hard-to-fill positions was 50:50 earlier for a search firm, it is now 25:75,” says Agrawal.

Finally, the quantum of fees is falling, even as costs remain the same, hurting bottom lines. “If I was paid Rs 100 earlier, Rs 50 would be to find the right guy, and Rs 50 for assessment and engagement. Now, clients say, the first part is a level-playing field, so, I’ll pay you only Rs 60,” says Agrawal.

ABC is already rejigging a few of its old services—for instance, résumé writing, which had been a key monetising tool. With people constantly updating their LinkedIn profile now, who needs résumés anymore? So, last year ABC turned the business into an online reputation management tool which tailors a candidate’s online presence. Agrawal’s recommendations: look smart on LinkedIn and discreet on Facebook, and don’t be too vocal about your political preferences on Twitter. ABC has also begun building a database of conversations between the recruiter, the client, and the candidate. “That provides a deeper engagement than a database. Can I assess a candidate’s suitability through his interactions with me and the client? LinkedIn can’t offer that judgement,” he says.

Global executive search firm Spencer Stuart has braced up too. It offers an option of uploading résumés, and the firm’s career advice section has a button that says ‘Share your LinkedIn profile’. “Why bother with a database, when LinkedIn is doing that for you?” asks Anjali Bansal, managing director of Spencer Stuart’s India business. “Assessment and judgement is becoming critical in recruitment. That skill can’t be replaced.” She also believes that at the very top end, involving global CXO and board placements, LinkedIn doesn’t work. “You either know them or you don’t,” she says.

Despite LinkedIn’s increasing popularity, however, job boards and portals such as Naukri, Monster, and Shine dominate in India because they are cheaper, especially for bulk hiring. HCL gets 75% of its 30,000 recruitments every year through them; L&T hires through these portals as well as college campuses.

Most HR managers Fortune India spoke to felt that companies haven’t dumped other online job boards and agencies because of LinkedIn’s steep pricing. Ranjhan of Honda Cars India says LinkedIn “needs to be aggressively priced”. A Naukri.com login costs about a tenth of LinkedIn’s paid login in India. The majority of the companies which are LinkedIn members don’t pay. In fact, only 33% or 165 of the companies on the Fortune India 500 are LinkedIn’s premium customers in India.

K. Ramkumar, executive director at ICICI Bank, says, “We haven’t availed of their services, but we’ve heard talks about their steep pricing—it looks like a dollar-denominated pricing.” Some big corporations like Godrej are evaluating the return on investments in LinkedIn, says Sumit Mitra, executive vice president-HR at the Godrej group.

Not all are complaining about the pricing. There’s L&T, which has doubled its spending on LinkedIn, and Abdulla says Airtel recovered its investments in about two months.

To be fair, a few months into its operations, Abdulla and LinkedIn’s then country head Hari Kumar convinced Mountain View (LinkedIn’s global HQ) to offer a recruitment solution tailored for the Indian market, after clients demanded to know why they were paying global rates. The solution is priced 40% lower—the first and only time LinkedIn has done that.

Although Nishant Rao, country manager at LinkedIn India, doesn’t share specifics, he says pricing is one of the levers that LinkedIn will use to build its business in India. For the past few months, LinkedIn India’s top team has been charting out the next phase of growth. “We’re now looking at the customer base in a segmented fashion. What are the needs of a large customer vs. that of a small customer? Do different industries need different focus? All these manifest in different levers,” says Rao. In June, LinkedIn invited the marketing heads of selected financial institutions in Mumbai to its first Finance Connect, an event aimed at building clients for its marketing solutions business.

The opportunity is huge in India, and Rao is gearing up. His north star? To help facilitate the 50 million employment target that the 12th Five-Year Plan of the Planning Commission has set. For the last few months, LinkedIn has been strengthening its India team. From four employees in December 2009, LinkedIn India now has more than 350. Most of them are at LinkedIn’s swanky R&D centre in Bangalore, the only one outside Mountain View.

Venkatasubramanian says India was a choice for two reasons: “The Indian market was the first emerging market for LinkedIn and very important in the overall scheme of things, given the high member base. The other was that it allowed for the site operations to be monitored 24/7 in tandem with the R&D centre in Mountain View.” Venkatasubramanian heads a team of more than a 100 techies in Bangalore, a number he says will increase soon with more senior hires.

Meanwhile, Rao is looking down the line as well, and is focussing on LinkedIn’s growing student base. Last August, LinkedIn lowered the minimum age of members from 18 to 13. The segment is the fastest growing—both globally and in India—and makes for a tenth of LinkedIn’s global member base. Within 10 months of introducing university pages, more than 24,000 higher education institutions have a presence on LinkedIn.