Insights on Entrepreneurship, Tech Integration, Bridging Generational gaps and AI revolution in HR Leadership
In the late 90s and 2000s, MaFoi Consultancy was the ultimate destination for job seekers in Bangalore. Securing a position through MaFoi was a source of pride, something to boast about among friends and peers.
Now, let’s delve into the visionary behind this esteemed company, who pioneered the startup business model long before the startup culture took hold in India. Mr. Pandiyarajan’s foresight led him to embrace strategies like crowdfunding and venture capital, setting the stage for MaFoi’s success.
After a brief foray into politics, Mr. Pandiyarajan has returned to the HR industry, ready to showcase his original startup prowess and leverage the technological advancements and opportunities of today. With CIEL HR, currently ranking 8th in the industry, he is swiftly climbing the ladder to reclaim the top spot, supported by a network of 8 comprehensive HR service companies under its wing.
Here are the edited excerpts from the interview with Mr. Pandiarajan of CIEL HR.
Could you share some details about your childhood? How did you get into this field?
I hail from Vilampatti, near Sivakasi, known for its firecracker industry. Despite losing my father at a young age, I pursued education and earned an MBA from XLRI, Jamshedpur, after completing engineering. With nine years of experience, my wife Lata and I founded MaFoi in August 1992, influenced by India’s economic changes. HR then focused on recruitment, with numerous small players. These agencies, known as placement agencies, specialized in niche placements.
Could you give us an overview of the recruitment scenario in India in 1992, particularly regarding how FMCG companies and engineering PSUs conducted hiring amidst the dominance of traditional methods like newspaper ads?
In the early 1990s, print media, notably newspapers like The Hindu and The Times of India, dominated recruitment advertising in India, preceding the advent of social media. Our company, established in September 1992, played a pioneering role in professionalizing the recruitment industry and introducing flexi-staffing concepts. We initiated overseas placements, targeting Indian engineers for opportunities abroad, particularly in the EPC industry, capitalizing on India’s engineering talent. This niche focus shifted with the IT boom, transitioning from engineering consulting to IT services, but solidifying our presence in the industry.
Did you adapt your services in response to the IT boom that began in 1997 and escalated further after 1999, particularly with companies like Infosys and the Y2K phenomenon?
We began by seizing opportunities in emerging sectors, securing exclusive recruitment contracts with Apple Computers upon their arrival in India in 1994. Our partnership involved recruiting 250 individuals, including key directors and software developers for Apple Development Incorporated. This marked a pivotal milestone, followed by engagements with prestigious clients like Monsanto and DuPont across diverse industries. Our ambitious targets aimed for an annual growth rate of 100%.
How did your upbringing in Sivakasi, as the child of a match factory worker, shape your journey into entrepreneurship, particularly in a challenging Indian landscape where entrepreneurship wasn’t mainstream?
Between 1992 and 2000, we utilized crowdsourcing, gathering investments from 276 individuals, including friends, family, employees, and employers. By 2000, we became the first Indian company to secure venture capital, emphasizing a robust business model, value proposition, and venture capital utilization. This pioneering approach set us apart, especially during the dot com era when we introduced the first dot com business model in the HR sector and secured eight and a half crores from three venture capital firms.
Can you describe your elevator pitch or the core message you conveyed to investors?
Our elevator pitch emphasized pioneering the HR sector’s transition into the dot com era with a candidate-centric model. Despite our 10 crore turnover then, we led the industry, which now values at 176,000 crores. By 2000, we expanded globally, serving clients in 18 countries.
How did you manage offshore money transfers amidst regulatory requirements like obtaining RBI permission, which may be unfamiliar to many today?
In 2000, we expanded internationally while navigating RBI regulations, opening offices in Singapore, Dubai, New Jersey, and London with an investment of eight and a half crores. A significant portion went into brand building, resulting in MaFoi becoming the industry’s most recognized brand with 7% top-of-mind recall nationwide. By 2004, we attracted Vedior from the Netherlands, acquiring shares from our initial 276 investors and 3 VCs. Each investor received returns of 14 to 24 times their initial investment, showcasing the complexities of managing investor syndicates and the rewarding outcomes of strategic partnerships.
During those days, when you had 276 investors, how did you manage interactions with them? Would they call you?
Back then, my wife, Lata, a chartered accountant, played a pivotal role as the primary liaison for our 276 investors, some from our village. She efficiently managed communications and ensured timely returns, with some investors even naming their houses after her in recognition of her role. Initially, we paid a 20% dividend annually, later increasing it to 32% after securing investments from venture capitalists.
How did you prioritize robust processes amidst today’s entrepreneurial landscape, marked by ample capital and rapid scaling? Was building for the long term a conscious decision? Share instances of challenges in adhering to processes during tough times.
MaFoi’s mission aimed at global HR service provider status, driven by values like dignity and growth, guiding investments in institutional needs. Post-VC investments, people became a priority, leading to premium positioning. Expansion into 18 countries, including the Middle East and Southeast Asia, provided extensive career growth opportunities. A dedicated team of nine catalyzed company growth from 10 to 1000 crores. Facilitating multinational entry into India continued post Vedior’s acquisition by Randstad. Subsequent political venture followed the company’s sale in 2010.
How did you maintain alignment with your team amid the psychological challenges of entrepreneurship, especially considering the lack of mental fitness support systems during that time? How did you manage stress and uphold commitment to your goals? Moreover, in a hierarchical Indian structure where vulnerability isn’t commonly shared, how did you foster trust within your team?
During our early entrepreneurial journey starting in 1992, external factors significantly impacted our growth, such as the Babri Masjid incident in December 1992, leading to a one-year ban on Indian manpower by several Middle Eastern and Southeast Asian countries. Despite setbacks, our team of 25-30 individuals displayed resilience, adapting to challenges by diversifying services and exploring various avenues for sustenance. Following the dot-com boom, our strategic foresight helped navigate the volatile market, with only our company and Naukri surviving among ventures that raised venture capital alongside us. Despite being valued at 1000 crores with 72,000 deputies and 2000 permanent employees, our financial gains were limited due to circumstances surrounding our exit in 2004 and Vedior’s hostile acquisition by Randstad in 2008. Despite challenges, including my candidacy for parliament in 2009, our company persevered, leading to the establishment of new entities and initiatives, including Varam Microfinance, leveraging our expertise in microfinance.
How did it feel to receive such recognition from industry professionals and media outlets, like Jahangir Pochat, who specifically recommended MaFoi for your expertise in placing senior leadership during the retail revolution in India?
Being the first company in the country to establish a dedicated executive search subsidiary, MoFa pioneered global search solutions through MaFoi Search. Within the initial 18 years, we successfully placed over 2000 leaders, including CXOs and CEOs, across various industries. This extensive experience played a pivotal role in shaping our subsequent ventures. Following a three-year hiatus from recruitment and staffing, we transitioned to our new identity under CIEL HR, our parent company.
When was CIEL born?
Established in 2015 after acquiring brand rights for MaFoi, CIEL HR faced legal challenges, including arbitration, which were resolved by 2019, allowing resumption of operations after a three-year non-compete period. Despite the initial hurdles, CIEL HR emerged as one of the top eight companies in the industry over nine years. The industry expanded significantly to a 1 lakh crore market, with 12 multinational corporations and indigenous companies listed on stock exchanges. Public and private investments transformed the industry into a 1,76,000 crore market across nine segments.
Could you elaborate on the various segments within the industry, including HR tech, and consulting?
In the past nine years, our industry has expanded to include various segments like consulting and tech solutions. Key individuals such as Aditya and Santosh, former colleagues, have played pivotal roles in CIEL HR’s growth. Three years ago, I transitioned from politics back to entrepreneurship, holding an 80% ownership stake in the reorganized companies. CIEL HR emerged as the leading entity, driving technology, consulting, staffing, and search selection services (SSR).
Can you elaborate on the companies within your organization and their respective focuses?
CIELHR serves as our flagship entity, focusing primarily on recruitment and staffing solutions. Zombie has established itself as a leader in the digital assessment and leadership development sector, surpassing global competitors like Thomas Profiling with its fully digital-first approach. MaFoi, while restricted from recruitment and staffing, offers essential consulting and advisory services, including payroll management and compliance. Recent acquisitions, such as RG Staffing, have bolstered our presence in IT staffing, while ongoing efforts to acquire a digital learning platform aim to enhance our HR tech capabilities. Additionally, CIEL Tech specializes in managed services for IT and auto industries, supporting organizations entering the Indian market.
Our participation in the National Apprenticeship Promotion Scheme (NAPS) has positioned us among the top 10 licensed third-party aggregators, engaging thousands of apprentices across prominent Indian organizations. Despite being ranked eighth in the industry, our turnover has surpassed 1,100 crores, reflecting robust growth with a Compound Annual Growth Rate (CAGR) of approximately 51% over the last five years. This growth underscores our commitment to innovation and excellence in the HR sector.
In the era of Industry 4.0 and AI integration, how should organizations balance prioritizing technology with maintaining a people-centric approach? What strategies do you suggest for addressing this balance between technological innovation and empowering the workforce?
Companies increasingly prioritize digital-first approaches and technology integration, particularly in performance management, with the rise of Objectives and Key Results (OKRs) championed by figures like Sanket Asad. This alignment of technology and human elements is crucial for navigating the transient nature of modern organizations. The demand for rapid technology deployment is evident in the popularity of HR Management Systems (HRMS) and the emergence of unicorns like Darwinbox, emphasizing the need for seamless integration of technology with HR priorities for employee accountability and value.
How do you see this chaos/shift towards digital-first approaches and technology integration in companies as an opportunity?
Amidst industry growth expected to surpass 200,000 crores, our transition coaching solution has gained prominence, addressing challenges during organizational changes. Combining assessment and coaching, it caters to individuals at all career stages, facilitating smooth transitions amidst uncertainty. This initiative aids organizations in navigating change, enhancing adaptability, and fostering resilience, acknowledging diverse individual needs and facilitating growth across industries.
Do you believe that companies should prioritize investing in transition coaching, particularly to address age-related biases and support individuals over 40 through career transitions effectively?
The modern workforce exhibits diverse age demographics, spanning from Gen C to individuals in their late 70s, necessitating HR functions to bridge the generation gap for organizational cohesion. Meanwhile, organizations are internalizing technological capabilities, establishing in-house tech teams to drive innovation, indicative of India’s growing prominence in the global tech landscape. This shift reflects significant changes in industry dynamics, offering ample opportunities for growth and development.
How can organizations leverage technology to ensure efficiency across all age demographics in the workforce without compromising on empathy and compassion, avoiding perceptions of mindfulness coaching or similar interventions?
Reverse mentoring is emerging as a pivotal strategy in organizations, offering fresh insights from younger employees to senior leaders. This approach fosters collaboration and learning across generations, particularly in areas like new technologies and innovative approaches. For instance, at Zombie’s recent leadership program, around 250 CHROs participated in reverse mentorship sessions led by younger employees, highlighting its effectiveness in facilitating knowledge exchange and bridging the generation gap.
In light of workplace chaos and transience, do you view data utilization and optimizing employee life cycles as opportunities? Additionally, do you align with Silicon Valley’s concerns about AI potentially displacing jobs, or do you believe technology primarily enhances employee efficiency?
The perceived threat of AI job displacement has waned, as companies now utilize AI for growth, transitioning from SAS to AI platforms across six digital assets. Despite technological advancements, fostering strong dyadic boss-subordinate relationships remains crucial, serving as a retention tool and aligning with objectives like those in the OKR model. As technology evolves, there’s an increasing demand for personalized cultures, facilitated by HRMS focusing on role clarity and objective alignment.
Would you attribute your success in the HR business to your adept management of people, considering the transient nature of teams often observed in startups?
Yes, absolutely. In our new avatar, we have brought together around 790 individuals and 36,000 deputies. It’s crucial that the core values of MaFoi, focusing on people, integration, co-creation, remain intact within CIEL HR. We are often referred to as MaFoi version 3 due to our commitment to values like dignity, transparency, diversity, and growth. With plans for a public issue in the next 5 to 6 months and listing on both BSE and NSE, we anticipate significant capital infusion. This will not only enhance our size but also elevate our quality and ownership structure within the organization, positioning us to make a global impact.
With the tools, techniques, and technologies available today, would your younger self, Mr. PandiaRajan, have found it easier to scale up faster and better?
Indeed, the pace of scaling a company has significantly accelerated with the advancements in tools, techniques, and technologies. Today, companies can achieve remarkable growth, moving from a 5 lakh revenue to a 1,000 crore revenue within just five years. While it took us nine years to surpass 1,100 crores, achieving a 50% Compound Annual Growth Rate (CAGR) is now eminently feasible in the industry. Additionally, the option to grow through acquisitions, a strategy we are actively pursuing with two already completed and plans for three more in the coming financial year, presents a significant competitive advantage for CIEL HR.
After your 10 to 15 year journey in entrepreneurship, followed by a period of involvement in politics, do you now feel more at home returning to the business world?
I’ve never regretted being in politics; it’s essentially macro-HR. My experience in politics, serving as an MLA twice and as a Minister for 5 years, provided invaluable insights. In many ways, politics is akin to macro HR, operating at the societal level, while HR functions at the enterprise and individual levels. The skill sets are highly transferable between the two domains, offering unique perspectives and opportunities for growth.
In your second stint in entrepreneurship, are there any specific insights from your time in politics that you’re implementing into your current endeavors?
Insights from politics, such as constituency understanding and governance principles, have greatly benefited our entrepreneurship endeavors, especially in skill development initiatives. Leveraging government schemes and CSR funds, our subsidiary, CIEL Skills, actively contributes to skill development projects. Additionally, digital initiatives like Pro Sculpt and Elate focus on institutional skill development. The macro understanding of governance aids our strategic approach, anticipating industry opportunities and challenges. With 790 full-time employees and 36,000 deputies, we aim to be among the top five companies in the industry within the next year as we expand and strive for a leadership position.
What are some of the key influences, whether they be people, historical events, books, or movies, that have shaped your journey through trials, tribulations, and successes, including your experiences in politics?
Key influences shaping my journey include V. Krishnamurthy, ex-chairman of Maruti Suzuki, who mentored me for three years, unveiling my entrepreneurial potential. Books like “The World is Flat” and biographies like “Every Street is Paved with Gold” shaped my industry and leadership perspectives. As a Tamil author, works like “The Wisdom of Thirukkural” and writings by Sujata, especially his science fiction, inspired me in Tamil literature. Sujata’s foresight, predicting the AI revolution years ago, deeply influenced my thinking.
It’s been a pleasure finally interviewing you. So as per our discussion, the key takeaway for startups is embracing life’s transient nature and finding opportunity amidst chaos. And it’s important to remember that AI isn’t a threat to humanity.
Very much. In my view, AI will serve as a significant enabler, despite concerns about its limitations. I believe the pressures and counter pressures surrounding AI will create vast opportunities, particularly for India. I anticipate that much of the pioneering work in AI will emerge from India, which bodes well for both the nation and its people.