— Gergley, for the first two years, you worked in Moscow at Cobalt Recruitment, which essentially has the same aims as Adelphi. What was it that made you want to start your own business: personal ambition, new opportunities, or was it something else?
— You are right, the aims of both companies really are extremely similar. But it wasn’t that so much. Put simply, I realised that, regardless of the economic details, I wanted to live in Russia. The question was unavoidable: how would I live there, what would I do? Being in London, I started to think about what kind of employment I might be able to find for myself in Moscow. The interesting thing is that in London I was working as a chef in one of the best-known restaurants. But it wasn’t for me: the money wasn’t great and I really didn’t have much free time at all. Also, no sooner had I got to know fairly well what the restaurant business was all about than I realised that it really wasn’t me. Setting up a recruitment company seemed like a worthwhile thing to do, and I had a feeling that I might be able to achieve something in that business. The business, of course, is not an easy one, but, on the other hand, it doesn’t require large amounts of money and investment or having to attract any serious assets. Initial outlay is office rent, computers, office equipment, and hiring staff. So, we are not talking about any inordinate sums.
— Does your company have a large staff?
— At the moment we have 12 people working for us.
— Are they only Russians or are there also people from other countries?
— I have one Englishman working there: two, if you count me as well. The rest are Russian, including my business partner.
– Compared with the European recruitment market, the one in Russia is smaller, despite the country’s larger population. Experts give various explanations for this. But I think that it is lagging behind for now because every European company automatically turns to an agency when recruiting personnel. They don’t retain recruiters on their staff – it would be almost like keeping your own fireman or policeman. In Russian companies, though, a huge number of HR officers (recruiters) are still maintained on the staff, and this has a negative effect on development in this field. On the one hand, this is a drawback, but, on the other hand, it shows that in Russia there is still room for development. All the more so as the recruitment market is completely dependent upon overall business activity.
The costs for entering this market, like any in the service sector, are not enormous. Launching a recruitment agency doesn’t require any specialized equipment or expensive licenses. All outgoings at the initial stages are relatively straightforward: rent for a small office, creation of a website, a small amount of money for promotion and for taking on a few employees. Hence the threshold for entering the market is not a high one: from 500,000 to 1.5–2m roubles.
It is vital to define areas of specialization – what kind of staff exactly the agency is going to be dealing with. Various kinds of clients presuppose various kinds of promotion. If the agency focuses on mass recruitment, then potential clients are the restaurant, hospitality, and construction businesses, retail chains, delivery companies, cleaning and courier services, and so on. Operating in this area means deriving an income from workers in bulk quantities, receiving a small commission for each person recruited. Whereas agencies which specialize in recruiting top and middle managers, and highly-qualified experts, receive an income from having their own particular contacts. The fee for an agency to procuring a Managing Director for a western company, for example, can be as high as a million roubles. The fee for one waiter in a large-scale recruitment drive comes to, on average, around 10,000 roubles. Thus, there are different ways of earning income and different ways of promoting oneself. In terms of the budget for promoting one’s services, then probably the minimum figure (which it makes sense to include in the business plan) is 50–70,000 roubles a month. For this amount, it is possible to promote a website and put out a very modest advert (on social media, for example). Obviously, the budget for promotion depends on the means available to the investor or owner. And the law here is simple and easily understood: if you want a result as quickly as possible, you need a large budget. If there isn’t the money for this, and you are counting on the company evolving, then what you will need a lot of is time. To find the balance between “fast” and “cheap” is something each agency should do themselves in keeping with their objectives and capabilities.
Of course, the needs of the enterprise regarding recoupment will also depend on the amounts invested, and the speed with which a client base can be grown.
— Was it difficult finding people to work at an English recruitment company?
— I wouldn't say so. The first idea was to understand what the situation was in Russia in the area I was intending to plunge into so that I could develop the business from the ground up. It worked. The first team was put together in London but when the time came to get ourselves over to Russia, it transpired that, for example, one Russian girl didn’t want to leave England behind. The it turned out that overall few wanted to go. So, in Russia a completely new team had to be put together. At first there were three or four of us. Then I struck lucky: I met an excellent business partner – Anna Khrustaleva. Her attitude to the business is different from the majority of recruiters who think only of short-term profit. Anna has a much broader perspective on the issue. She is interested in the actual processes, all the more so as we were both involved in the property market at the time. So, I can’t say that I was searching hard for a partner. She simply popped up in the right place at the right time.
— What are the kind of managers Adelphi recruits, and how? What kind of companies are your clients – just Russian ones or are they also foreign ones operating in the RF?
— We do it by specializing. Each of our employees is a consultant specializing in one particular area. They carry out a search for middle and high-ranking managers: top managers who receive a salary of, for example, from 100,000 to 1,200,000 roubles. There are various sectors: pharmaceuticals, property, retail chains, and IT. I should also mention the finance and accountancy positions which there are in all of these sectors. 70 percent of our business is international companies.
— Is it possible to say which sector in Russia most of the requests for top managers and specialists come from?
— That’s difficult as a lot depends on the sector in question. Let’s take real estate, for example. Here, most likely, we are now talking about replacing those people who used to be involved in operational sites. If four years ago one could assume that completely filling a shopping centre with tenants was a foregone conclusion, then now the situation has changed. Now, tenants have to be fought for, new contracts are needed, and that means getting new people in too, people who will do this, not just sit there twiddling their thumbs but who will get out there and assert themselves.
— I would have thought that recruitment in the current situation in Russia is less than straightforward. The crisis that has developed, the sanctions, the fall of the rouble: is any of this reflected in your company’s activities? Are firms perhaps not particularly desperate to take on new staff?
— Yes, that’s true. But the thing is that the Russian recruitment market is already sufficiently developed now. In any case, it is a on a bigger scale than it was when I first started. I mean, our business has grown from 3 or 4 to 12 employees, which is an annual growth of 30–40 percent. And that is all with the current economic conditions in Russia. Why has that happened? Firstly, there are certain market requirements, and you simply have to understand what they are. Let’s say companies operating in a segment like pharmaceuticals are feeling comfortable in the market, planning new businesses, developing new products and marketing strategies. If we are talking about more limited markets like real estate, then the situation is different. It still needs high-class specialists, but of a different profile. If three years ago those in demand were managers involved in finding land, building business centres or office blocks, then now with these jobs we are simply coming up with zero. These days all efforts are directed at getting as much income as possible from already operational sites. Hence the labour force is there, it is simply a case of finding the people - not who are free at the moment and out of work - but who do the job in this day and age with greater quality. Those are the kind of people we need to procure.
— Another way of looking at it, is that a good manager comes with a good salary and, no doubt, not all companies are going to be up for that?
— That’s right. But on the other hand, there are now very few job candidates pushing for unrealistic demands. To a certain extent, in this regard, it has now even become a little easier than it was in the run-up to 2008. The market in Russia then was booming and people were forming patently unrealistic expectations. Some companies were paying their senior managers just silly money. Times have changed. But it should be pointed out that salaries in roubles haven’t fallen, they have shrunk in two ways: in their exchange value, due to the rouble falling, and from the point of view of the consumer basket, insofar as food has become more expensive. Hence I wouldn’t say that rouble salaries in Russia have dropped particularly.
– The Moscow market for staff recruitment services has reached its own particular milestone being now just over 25 years old. In this relatively short space of time, an extensive infrastructure has been built: modest recruitment companies have subsequently transformed themselves into large groups. Narrow-focus HR agencies are growing successfully, many of them united in professional recruiter organizations, and their activities are providing specialized social networks, powerful “work” websites, media, and a field-specific video and print industry. And all of this has been successfully integrated into the global recruitment network and meets the highest professional standards.
The total volume of the HR market in the Moscow region, according to several estimates, consolidates up to 75% of the Russian recruitment market, and is valued at around $10bn a year, with a consistent tendency towards growth.
The cost of entering the business is very reasonable (from 500,000 to 1.5-2m roubles) and depends upon the strategic objectives of those setting up the company. The basic costs for the initial period are standard:
– leasing premises (recently these costs have dropped by 25%);
– website creation (100,000–200,000 roubles);
– developing your own CRM system or leasing one (roughly 50,000 roubles);
– paid access to basic Russian internet resources (at least 75,000 roubles a month);
– staff salaries (20–30,000 roubles + % from vacancies filled);
– company web promotion (25–50,000 roubles);
– participation in different trade fairs and events (up to 50,000 roubles);
– other unforeseen costs (30–40,000 roubles).
The recoupment period depends on the state of the market and on staff performance, and stands at around 1-2 years.
Despite pessimistic forecasts regarding the spread of automation, the strengthening of the role of IT and even wholesale robotization in the HR field, the prospects for this market are self-evident: business in sourcing and recruiting personnel is destined for success and will be unswerving in its development.
— Does Adelphi have any firm plans for the future in Russia? Do you see the Russian market as having good prospects?
— The most important thing at the moment is to be patient. Firstly, I believe in Russia’s great opportunities. If this wasn’t so, I wouldn’t have chosen here to start a business. In my assessment, there are prospects, but we will get a feel for them, presumably, in two or three years, when our everyday work yields some tangible results. The crisis is good in that, in such times, weak competitors leave the market. Secondly, the present situation opens up the possibility of building trusted relations with clients, which always pays off a hundred times over. Thirdly, the level of competency on the Russian market is still a little lower than on more developed markets in a number of other countries. It is right down to this that our company has grown to four times its size. Obviously, one of the reasons is that our clients have become aware that we offer them higher quality services than other companies. After all, both Russian and international companies insist on quality work above all else. This is what they really want, and the market is ripe for that.
— You speak excellent Russian. Where did you learn it and why did you choose Russian exactly? Is knowing Russian a great help in your work?
— I started to learn Russian when I was still at school in London. It is difficult to articulate exactly why it was I made that exact choice. There was a certain element of the exotic in it. It all happened in the 1990s, everybody was hearing about Russia, it was always on the news, and I thought: why not? If there is the opportunity, why not try learning something different rather than just German or French? Then I came to Russia as part of a student exchange, and I liked it here. I wouldn’t say that I fell in love with Russia straightaway, but Moscow made a big impression on me. It was kind of like another world, yet still the same one, very similar to the one in Europe. And I thought that I had to be in Russia, had to understand what peoples’ lives here were like. And with time, I came to the conclusion that I feel very much at home here. That is why I am here. But I wouldn’t say that living in Russia is easy in every way: there are some things that are really quite irritating.
— Like, when I had to go for a Russian temporary residence permit, it took me three months. It took up a lot of time I could have spent working. I was stuck in a queue at various authorities, where sometimes people would offer to sell you their place in the queue… That’s when you realise that there are, of course, difficulties to overcome. However, it doesn’t alter the generally positive picture. I like the fact that Russians are very emotional, open compared with the English, let’s say. The directness of Russians appeals to me. At first, you could be forgiven for thinking Russians are somewhat rude but really they are just straightforward. Let’s say if the waitress attending to you is in a bad mood, you will, no doubt, know about it. And such a direct approach actually appeals to me.
Hence, business is good, but I am not in Russia purely for that. There are a lot of other countries where you could set a business up, and I don’t rule out the possibility that there are other nations where being in this business would be even more lucrative than it is in Russia. But I am still here.
— Do you know of any foreign businessmen who manage to get by successfully in Russia without knowing the language?
— I think that anyone coming to Moscow for at least two or three years should learn Russian. Not so they can run a business but so they can live here. You have to interact with people, live in their world, and not feel as if you are some kind of island in the country you find yourself in. As for business contacts, expats who don’t know Russian find developing their businesses extremely challenging.
— What impressions of Moscow can you share with us? How do you spend your free time, what kind of food do you prefer?
— Moscow has changed greatly over the last 10 years. The city is expanding very rapidly. I’ve been doing a lot of sport, especially during the summer. Sometimes I need to feel away from this supercity. Which is why I like places with the greenery of Gorky Park in the middle of the capital, Neskuchny Garden near where I live. But even so, business, clearly, is the main part of my life.
I like the great variety of cuisines on offer in Moscow. If friends come over from London, I have to take them to a real Russian restaurant, and a Georgian one, to a restaurant with eastern cuisine. You don’t come across such good Georgian, eastern cooking in Europe as you do in Moscow. And the Italian and French restaurants here are not as good quality as they are in Europe, and they are more expensive. But that is something that is more than possible to live with.