7 out of 10 SMBs in India prefer hiring employees through personal references : Report

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7 out of 10 SMBs in India prefer hiring employees through personal references : Report
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  • SMBs hire most of their employees through referrals and family connections, because of which they have lost out on a large pool of skilled talent.
  • This hiring practice has made it difficult for them to find the right candidates, with at least 40% of them highlighting the problem of skill gaps within their organisation.
  • Sashi Kumar of Indeed says that SMBs in India are expected to create 2 million jobs in the next five years.
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According to a report by jobs website Indeed, small and medium sized businesses (SMBs) are struggling to find the right talent pool.

“SMB hiring practices are focused on referrals and family connections, because of which they have lost out on a large pool of skilled talent,” says the report. Around 74% of them generally hire through personal or known references because it is easier or quicker to hire a candidate from within the family or through connections.

This hiring practice has made it difficult for them to find candidates with the right skills.At least 40% of them highlighted the problem of skill gap within their organisation.

Also, due to lack of time and resources, most of the SMBs don’t have dedicated hiring partners, which creates a huge gap between SMBs and jobseekers. At last count, over 67% of them looked for jobs on these job websites.

“Today’s SMBs are facing increased competition for talent, especially from large players. They are struggling to find the right-fit candidates, and are wary of the impact hiring delays will have on their business. However, it's evident that job seekers are focused on SMBs which means that they need to lay the foundation for strong HR practices and realise the value of hiring right to flourish and contribute to India’s growing economy,” said Sashi Kumar, head of sales, Indeed India.

SMBs in India to create over 2 million jobs


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Kumar further said that SMBs in India are expected to create 2 million jobs in the next five years. Therefore, it is important for them to adopt democratic hiring practices that would allow them to create a more diverse talent pool.

Bangalore and Mumbai have the largest talent pool looking for jobs in SMBs, followed by Chennai, Hyderabad and Kolkata.

IT is the most preferred sector among jobseekers. E-commerce, and food and hospitality ranks second and third respectively in terms of preference.

“With the accelerated digitisation, Indian SMBs are at a crucial phase of growth where they will be competing against large enterprises and need to unlock their true potential by leveraging technology in hiring,” the report says.

Over 49% of jobseekers are looking for software developer roles in SMBs, while 46% of them want field sales executive jobs.

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Top job roles preferred by jobseekers% of jobseekers
Software developer49%
Field sales executive46%
Front desk executive41%
Customer relationship manager36%
HR associate/executive 32%
Source: Indeed report

Over 72% of jobseekers prefer working in SMBs over large enterprises. The primary reason behind this could be the higher scope for innovation and learning as compared to larger organisations.

Despite low salaries and inadequate benefits and perks, job seekers feel that SMBs offer a faster growth curve and a dynamic learning environment, compared to larger companies.

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