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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

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