Category HR News Express

Nokia Siemens to Ramp Up Chinese 3G Staffing Numbers

Nokia Siemens Networks (NSN) has announced that it is to increase its TD-SCDMA trained engineers to over 1,200 staff, over an undefined timeframe. The company recently obtained the official approvals for deployment of its TD-SCDMA equipment from Ministry of Industry and Information Technology.

NSN was the major solution supplier for China Mobile Shen Zhen TD-SCDMA network’s planning, construction and optimization.

Adds Steven Shaw, head of Services in Greater China region of NSN, “We have gained invaluable experience in working with China Mobile in the Shen Zhen TD-SCDMA network. With our strong base in 2G and rich global experience in 3G deployment, comprehensive TD-SCDMA portfolio, strong local service support and clear evolution path to LTE, we are confident in helping operator customers to fulfill their goals.”

NSN shareholder, Nokia is a 49% holder in a Chinese joint venture, Potevio with China Putian to develop network infrastructure based on the Chinese 3G standard. Potevio was set up in 2005 and has also been the major supplier of equipment to China Mobile’s TD-SCDMA trial networks in Tianjin and Qinhuangdao.

Last month, Nokia’s vice-president of Greater China sales, David Tang said that the firm would launch a range of handsets based on the Chinese 3G standard.

China’s outsourcing market up to £41bn by year end

The HR outsourcing market in China is expected to be worth more than £41bn at the end of this year, according to a new study.

Outsourcing provider EquaTerra said the Chinese market was experiencing rapid growth and would expand by at least 25% by the end of 2009. Five years ago, the market was valued at only £8bn.

EquaTerra spoke to 15 leading China-based HR directors of foreign businesses. They cited several reasons for not outsourcing HR to China, including concerns about data security and loss of management control.

But they acknowledged that a significant proportion of HR administration functions would be outsourced in the next three to five years, with payroll and recruitment leading the way.

However, the report warned that China still does not have enough skilled manpower to meet the growing demands of the HR outsourcing market.

EquaTerra said this would lead to wage acceleration for providers, margin erosion and talent shortages.

“Ultimately, the dominant players will be those companies that can obtain and retain quality delivery people,” the report said.

To read the full report, download the Human Resources Outsourcing in China pdf

Mike Berry (About this Author)

51job Chinese Recruiter Lowered

51job Inc.’s (JOBS) financial results for the second quarter showed a lower net profit margin due to higher sales and marketing expenses and a higher tax rate. Both its revenue and EPS missed the market consensus.

Although 51job continues to have the highest brand recognition in the online and offline recruiting markets in China, the leading position hasn’t gained any competitive advantage for 51job to improve its profit margin. Therefore, we are downgrading the stock from Buy to Hold.

China has 253 million internet users as of the end of June 2008. It has approximately 750 million workers now and more and more companies of different size begin to use low-cost online recruiting. This is a very positive tail wind environment in which to operate. Additionally, it is estimated that revenue of online recruiting services in China will reach RMB 2.63 billion in 2011. According to estimates, revenue of online recruiting services will amount for 45.3% of the total recruiting market in 2010.

Through a targeted sales and marketing strategy, 51job has been focusing on further building the ’51job’ brand as the ‘one-stop’ human resource services provider. Now 51job is the most famous brand in the recruiting market in China and this position has helped the company enter more profitable second-tier cities in China.

Using a P/E multiple of 18.2x our fiscal year 2009 earnings per ADS estimate of $0.70 yields a target price of $12.75, which can reflect company’s great growth prospects, in our view.

CPC plans to hire 100,000 college graduates to work in villages

BEIJING, (Xinhua) — The Organization Department of the Communist Party of China (CPC) Central Committee has launched a project to make 100,000 college graduates over fives years to work in villages.

The Organization Department will work closely with the ministries of education and finance and the new ministry of human resources and social security to select competent graduates.

Graduates who pass written, oral and physical tests will be dispatched to work as assistants to heads of CPC branches and directors of village committees.

They will be responsible for helping farmers with agricultural technology, raising health awareness and skills, promoting cultural activities and also researching farmers’ complaints.

The graduate’s specialties will be an important reference for the consideration of selection.

The CPC will offer a three-year contract with adequate insurance to selected graduates with bachelor and master degrees. The monthly salaries will vary with the length of service.

Li Yuanchao, head of the Organization Department, urged Party officials at local levels to provide an appropriate environment for the work and lives of graduate workers.

Li said the project was a strategic move for the CPC to train reserve cadres who were acquainted with rural areas.

All qualifying tests to be held during the selection should be transparent to ensure fairness.

Graduates who complete the three-year service will have priority for consideration in civil service post in governments at all levels. Service in rural areas will be added to their accumulated length of service.

The Ministry of Education said the number of college students graduating this year will reach a record 5.59 million, 640,000 more than last year.

Duty of Care: Identifying and Managing HR Risks in China

Despite the size of China’s workforce, and the growing ranks of educated, young graduates available for hire, one of the main challenges for human resources managers continues to be identifying and recruiting talented employees. Because of the difficulty in identifying and hiring talent in China, it becomes that much more important not to lose these valuable employees once they are onboard. Human resources managers are increasingly looking beyond the traditional benefits and salary packages as a means of retaining staff.

While “Duty of Care” is often viewed as simply the responsibility an employer has to its employees, this concept is increasingly being seen as an important component in retaining employees. Duty of care has evolved from its traditional form, largely involving guarding against conventional workplace safety hazards and the provision of standard medical benefits to ensuring employees have access to care in the event of illness and providing proactive support to employee’s families in the form of wellness information and training. In the global workplace, however, the types of hazards and risks HR directors face when it comes to protecting their human assets have evolved to include a myriad of new areas.

Global Risks and Responsibility

The definition of the workplace has expanded. Employees are becoming increasingly mobile as business operations become more global, making direct physical oversight of all employees at all times less feasible. Some companies respond by helping employees in the event of a problem, which offers no ongoing support to employees over the course of their travels. However, travel into areas known for threats ranging from terrorism to natural disasters and pandemics warrants more active support and monitoring of employees. As employees are asked to travel to increasingly distant and foreign locations for business, human resources managers are first responsible for being aware of the potential risks of travel to various locations throughout the world. While business must continue even in areas known for higher travel and security risks, companies must be able to contact or account for employees as quickly as possible in the event of an incident in an area in which employees are traveling. The use of services to provide 24-hour travel support may help employees feel more secure and confident, with direct access to emergency assistance anytime, anywhere. This equally applies to Chinese employees traveling outside of Beijing and Shanghai – they may not be familiar with their surroundings and their presence as a “non-local” could make them a target for petty criminals or worse.

For companies with global operations, employees are often required to conduct business in countries with unfamiliar cultures or dangerous environments, with both often going together. While proper systems and monitoring are one part of strong travel support for employees, training is also an important component in preparation for travel or postings in foreign environments. For some locations, training may simply involve putting employees in a better position to fit in and succeed in a foreign business culture. In other environments, training is crucial in protecting and preparing employees to be able to handle dangerous situations. For example, with the increasing amount of Chinese investment in Africa and the Middle East, it is quite feasible that a senior project manager based in Beijing may be asked to travel to high risk areas such as Afghanistan or Nigeria for an extended period to oversee a crucial project. Providing that manager with pre-travel High Threat Environment training and emergency support while they are on the ground will enable them to better focus on the job at hand and also be prepared to handle incidents that may occur. They will be better aware of the threat environment and less likely to put themselves in danger. This kind of support from the company will also provide some peace of mind to the employee’s family back home in China. Training is also important in raising awareness and helping traveling employees to become familiar with the services and support the company offers. Having a top of the line foreign medical/security assistance program or emergency evacuation service is of no use if traveling employees are not familiar with the services or how to access them if necessary.

Duty to Identify Internal Risks

Duty of care also begins to enter the area of legal requirements employers must fulfill when it comes to protecting their employees. On a very basic level, employers have a responsibility to protect their staff from foreseeable risks. A major component in prevention is thorough due diligence of new employees, vendors, suppliers or any internal entity engaging the company’s people, assets or information. Background checks have generally been seen as an exercise to ensure the capabilities and qualifications of a potential employee or vendor. However, in addition to being a means of measuring capabilities, background checks may also surface historical risks that could threaten the company in the form of fraud, loss of assets or even violence. Having in place an effective due diligence program can also have a deterrent effect upon potential offenders from even approaching the company.

Even if there are no legal requirements, companies may consider voluntarily adopting a higher standard of duty of care as a part of good corporate social responsibility on behalf of all stakeholders involved, also making the company a more attractive employer.

Duty of Care and Retention

Extending beyond a form of infrastructure to protect employees from various risks, duty of care has evolved into a more organic concept as companies strive to show employees that they are valued on a very personal level through active engagement. A company that shows it values its employees as people, making employees feel as though they matter to the company on an individual level, is a company that will be seen as a good employer. A competitor can always offer to pay marginally higher salaries in an attempt to attract away employees. However, employees will not be ready to leave a good company, where they know they are well cared for, merely for a few dollars.

Neal Beatty is General Manager of Control Risks in Beijing. Control Risks is an independent risk consultancy with 18 offices on five continents. It provides advice and services that enable companies, governments and international organisations to accelerate opportunities and manage strategic and operational risks.

51job’s Aggressive Marketing Posture Delays Upside

Excerpts from Gilford Securities analyst Ashish R. Thadhani’s recent note to clients on 51job, Inc. (JOBS):

• • •

Solid 4Q: 33% YoY Growth, 15% Op. Margin, Cash ~$5 / ADS; Aggressive S&M (Sales & Marketing) Posture Delays Upside, EPS Estimates Cut

Investment Conclusion. Based on stepped-up operating expenses (marketing, sales force expansion and online product development) – offset partially by continued currency-aided revenue growth – we are reducing our estimates: 2008 GAAP EPADS to $0.55 on net revenue of $131 million (23% YoY growth) from $0.68 on net revenue of $128 million; and 2009 GAAP EPADS to $0.75 on net revenue of $163 million (25% YoY growth) from $0.90 on net revenue of $159 million.

We are lowering our target from $23 to $20.50. In 12-months, this would correspond to a $434 million enterprise value and 25-30x forward GAAP EPADS – a premium to 20% compound EPS growth in 2007-09E. Although 51job stated that “business fundamentals are stronger than ever,” we are disappointed by ballooning near-term S&M expenses (27% of 2008E net revenue vs. 22% in 2007) – ostensibly to match rival ChinaHR.com. On a positive note, the $360-405 million valuation placed on ChinaHR.com by Monster (MNST-Hold) has positive implications for 51job ($386 million), which remains much larger and more profitable than its nearest competitor.

4Q07 Results. GAAP EPADS of $0.10 vs. $0.09 a year ago on net revenue of $27.7 million (33% YoY growth) beat our $0.09 estimate on net revenue of $26.0 million. 51job posted positive variances in net revenue ($1.7 million led by training/outsourcing – this segment could benefit under the new labor law) and tax/other items ($0.2 million) – offset partially by operating costs ($1.1 million) and a forex translation loss ($0.5 million).

Revenue from online recruitment services advanced 40% YoY to 36% of the total. Operating income rose 57% YoY to $4.1 million (14.9% margin) and exceeded our $3.5 million estimate (13.3% margin) by 17%. Metrics showed somewhat slower growth in print advertising page-count (+21% YoY) with lower average revenue per page (-3% YoY in dollar terms attributed to city-mix); and steady growth in the number of employers using online services (+30% YoY) with higher revenue per employer (+8% YoY). Net cash climbed to $138.0 million (or $4.85 per ADS) from $131.7 million on September 30…

Investment Thesis. According to recent surveys, a shortage of qualified staff and high turnover ranks as the biggest business concern in China. 51job is enviably placed to capitalize on the rapidly evolving market for HR services in China – by applying a proven business model across its vast labor force (5x U.S.). Compared with traditional job search channels such as referrals and fairs, pioneers like 51job offer significant reach and speed advantages.

Favorable demographic drivers include GDP growth (~10% in recent years), Internet usage (ranked #2 behind the U.S.), an aging workforce and increasing private, urban and service sector employment. iResearch forecasts that the total recruitment market in China will increase from $568 million to $1.39 billion in 2005-10, implying 20% compound annual growth. During this period, the online recruitment segment is expected to advance from $99 million (17% of the total) to $631 million (45%), or 45% compound annual growth.

Superior positioning includes a premium brand/pricing; comprehensive online/offline offering; wide geographic presence (25+ cities); large direct sales force (over 1,600 representatives); and unmatched job seeker database (access to more than 16 million resumes for professional, clerical, industrial and hourly jobs). EPS growth stands to benefit from ramp-up of online subscriptions (from single-digit penetration of client budgets at present) and a scalable model offering 30%-plus operating margin (excluding share-based compensation).

JOBS is suitable for aggressive investors. In our opinion, principal risks include the following:

Deterioration of economic conditions in China, slowing of hiring activity or a “hard landing” scenario.

Competition from ChinaHR.com and Internet portals could pressure future profitability by way of higher marketing expenses and/or lower pricing.

Rapid online migration could result in cannibalization of offline revenue.

51job has an inconsistent execution record.
Uncertainties in the PRC regulatory and legal system, particularly laws governing foreign ownership and licensing/operation of HR and Internet business entities. Note that 51job is incorporated as a holding company in the Cayman Islands.

Disruptions such as spread of the H5N1 virus or a recurrence of SARS, political unrest, breakdown in relationship with a major publishing/distribution contractor, etc.
Influence of Recruit Co. and current management over all matters requiring a shareholder vote.
Correction in the U.S. markets.

Heidrick & Struggles up 58.8 percent in Asia and 33 percent in China

Sydney, (ANTARA News/Xinhua-PRNewswire-AsiaNet) – Heidrick & Struggles increased its net revenue by 58.8 per cent in the Asia Pacific region last year, driven by continuing high demand for leadership advisory and executive search services.

Net revenue for APAC was $US78.6 million. Operating income of $US15.9 million increased 20.1 per cent compared with 2006 and the operating margin was 20.3 per cent, compared with 26.8 per cent in 2006 as the firm invested in infrastructure to support its expansion.

Regional managing partner Gerry Davis says that Australia New Zealand, Greater China and Singapore recorded the highest growth rates, with ANZ revenue up 118 per cent on last year, Greater China up 33 per cent, Singapore 72 per cent, India, 29 per cent, Japan 33 per cent and Korea 61 per cent.

Davis says that an aggressive recruiting effort and investment in information technology infrastructure have provided a strong foundation for further regional expansion in 2008.

“Offices have also been expanded and upgraded to cater for the increased headcount. We have opened an office in Bangkok, Thailand to address the significant demand for multi-national and in-country executives,” Davis says.

The scale of reach of the Heidrick & Struggles operation in Asia Pacific has caused many corporations to seek access to its “thought leadership”, industry sector analysis and research materials, Davis says.

Leadership advisory practice leader Steve Langton says the firms advisory work has helped to increase the number of chief executive and non-executive director roles. “Leadership advice leverages the Heidrick & struggles reputation, brand and capability to support clients in addressing their talent concerns they have in a time of leadership transition.” Langton says.

Globally, for the fiscal year ended December 31, Heidrick & Struggles reported consolidated net revenue of $US619.7 million, an increase of 29.5 per cent from $US478.5 million in 2006. The firm expects global revenue to grow by between 5 and 8 per cent in 2008.

About Heidrick & Struggles International, Inc.

Heidrick & Struggles International, Inc. is the worlds premier provider of senior-level executive search and leadership consulting services, including talent management, board building, executive on-boarding and M&A effectiveness.

For more than 50 years, we have focused on quality service and built strong leadership teams through our relationships with clients and individuals worldwide. Today, Heidrick & Struggles leadership experts operate from principal business centers in North America, Latin America, Europe and Asia Pacific.

Recruiter Robert Walters goes shopping in China

Robert Walters, the recruitment consultants, will tomorrow announce an expansion into mainland China through an acquisition designed to increase its exposure to one of the world’s fastest-growing job markets.

The company, which already has operations in Hong Kong, Malaysia, Singapore and Japan, has bought Talent Spotter, a specialist recruitment business headquartered in Shanghai, for around £1.4m.

Although the deal is relatively small – Talent Spotter has 49 staff and one other office in the prosperous nearby city of Suzhou – it reflects the growing importance that professional services companies are placing on China.

Despite the country’s rapid economic growth over the past few decades, the recruitment sector is still in relative infancy. Nevertheless, the demand for such services is expected to rise as the country becomes more integrated into the global economy and Chinese businesses and organisations face calls for increasing professionalism.

Several recruitment companies have set up offices in China or established joint ventures, but Robert Walters’ move is believed to be the first foreign takeover of a domestic firm and is the first it has made in more than 10 years.

The acquisition is expected to be a platform for growing the business throughout the country. The acquisition comes as Robert Walters’ full-year results are expected to show a 17 per cent increase in net fee income to around £127m and a 30 per cent increase in pre-tax profits to £24.5m, despite the economic turmoil.

Mainland hiring momentum builds

Chinese mainland employers across all industries, and the service sector in particular, remain optimistic in their recruitment plans in the first quarter of 2008, according to a recent survey.

The employment outlook survey, conducted by Manpower, a world leader in the employment services industry, questioned nearly 52,000 employers around the world, including more than 16,000 in the Asia-Pacific region and 4,100 in the Chinese mainland.

The Chinese mainland net employment outlook improved by two-percentage points since last quarter, but dropped slightly compared to the same quarter of 2007, according to the survey.

In the first quarter of 2008, the net employment outlook for the Chinese mainland stands at 14 percent. That figure is the percentage of employers anticipating an increase in hiring activity, minus that of employers expecting to reduce their workforce, said the Manpower.

The survey also found the strongest recruitment plans in the service sector, for the second consecutive quarter, as services gear up for the 2008 Olympic Games.

“The Chinese mainland, faced with companies’ over-cautious recruitment activities, is drafting related detailed laws and regulations to clarify its labor contract law,” said Lucille Wu, managing director of Manpower Greater China. She added, “Once this is complete, we believe employment relationships in the Chinese mainland will achieve standardization.”

Among major cities of the Chinese mainland, employers in Chengdu, capital of Southwest China’s Sichuan Province and where the outlook index has reached 19 percent, report the strongest recruitment expectations. That figure is a 10-percentage point improvement over the previous quarter and the strongest quarter-over-quarter increase to date.

“The result of the survey reflects a growing demand for talent in Chengdu, one of the most important cities in southwestern China,” said Wu.

Last September, the Sichuan provincial government signed a strategic cooperation agreement on talent development with Manpower, in an effort to take advantage of Manpower’s network to improve the local talent pool while attracting foreign investment.

In the other 26 countries and regions covered by the survey, first-quarter hiring is also expected to be positive although degrees of optimism vary, according to the survey.

In the Asia-Pacific region, employers in Australia, Japan, New Zealand, Singapore and Taiwan Province indicate they will slow the pace of hiring compared to the same period of last year. The strongest recruitment plans were reported in Singapore and India.

Salary.com(TM) Reports Record Financial Results for Third Quarter 2008

WALTHAM, Mass., Jan 31, 2008 (BUSINESS WIRE) — SLRY | news | PowerRating | PR Charts — Salary.com, Inc. (NASDAQ: SLRY), a leading provider of on-demand compensation and talent management solutions, today announced financial results for its third quarter of fiscal 2008, which ended December 31, 2007. Third quarter revenue was $9.2 million, an increase of 52% from the third quarter of fiscal 2007 and 8% sequentially.

Cash flow from operations was $2.3 million for the third quarter of fiscal 2008, compared to $1.4 million in the third quarter of fiscal 2007 and $1.5 million in the prior quarter. Year-to-date operating cash flow was $5.4 million, compared to $2.0 million in the same period in the prior year, an increase of over 170%. Total deferred revenue was $20.9 million at the end of the quarter, an increase of 36% year-over-year and 14% sequentially.

Kent Plunkett, founder and chief executive officer stated, “Q3 was a solid quarter, highlighted by record revenue, expansion of our customer base, and continued strong cash flow generation. In the third quarter we expanded our product offerings with enriched data sets for our compensation management solutions and we added key competencies to our talent management solution, which gained additional traction in the quarter.”