With a customer base of 175 at present, the company’s order book stands at Rs 500 crore
Private equity firm Multiples Alternate Asset Management backed human resources technology and solutions outsourcing company PeopleStrong is looking to close two acquisitions this year. According to a top company executive, one will be a high-value transaction while the other one will be a smaller acquisition.
Speaking exclusively with DNA Money, Pankaj Bansal, chief executive officer and co-founder, PeopleStrong, said, “We will conclude two acquisitions in the next 12 months. The focus (for these acquisitions) will be payroll and technology-led. The companies that we’ll target will either be in India or Asia.”
Renuka Ramnath promoted Multiples owns a significant majority in PeopleStrong while the company promoters and employees (around 50 practitioners) own 25%. The only other private investment in the company is from HDFC Holdings (that entered in 2013). Multiples bought out other investor(s) when it reportedly placed around Rs 400 crore in PeopleStrong earlier this year. The Multiples deal, according to Bansal, was a combination of primary (money going to the company) and secondary (buying out existing investors) transactions.
“Some money went into buying out existing investors and a portion (of Rs 400 crore) came into the company that will be utilised to make the two acquisitions. The deal size for technology acquisition may be small but in the case of a payroll business in Asia, it may be large. In HR, any transaction that’s Rs 100 crore is large and Rs 20-30 crore is small,” said Bansal adding that post these acquisitions PeopleStrong will become the largest HR firm in India.
Servicing companies including the likes of Wipro, Honeywell, Tata Motors, Mahindra etc. the company’s business model involves clients opting for seven to 10-year contracts. A sector agnostic player, the management has segregated its clients into two categories viz. customers with between 500 and 5,000 employees and the second category is customers with over 5,000 employees.
With a customer base of 175 at present, the company’s order book stands at Rs 500 crore. In terms of annual revenue, it is typically 50% of the overall order book. “We have grown 60% last year (on the revenue base) and targeting similar growth rate this year as well,” said Bansal adding that PeopleStrong is on course to become the first unicorn in HR space in the coming years.
The HR landscape in India currently comprises around 40,000 placement companies, about 40-50 human resources consulting firms and seven to eight top executive search firms. That apart, a few global technology players have also set up shop to tap the growing HR sector. The country has also witnessed two entities viz. Teamlease Services and Ikya Human Capital Solutions going public in the recent past.
“The market size of the human resources industry in India currently is about $2 billion growing at 23% to 24% annually and a potential to grow over five times over the next four to five years. About 70% of this market is dominated by temporary manpower or general recruitment. Rest of the market is totally (HR) technology driven,” said Bansal adding that PeopleStrong is doing in India what Workday has done in the US.
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