Weekly Startup Profiles > Beanstalk
|The sky is the limit in the human resource outsourcing industry, exclaims Kalpana. Combine that with an almost magical way of leveraging resources, and Beanstalk's growth is practically fairytale - even down to the bumps and bad guys.|
Outsourced HR consulting services (non recruitment), training and assessment.
On the one hand was boredom: "I realized that I was being paid a salary to do things for others." On the other, opportunity: "I sensed a complete lack of respect for the peoples' function in India by line managers. There was burning angst within me to attempt to set things right." And the seed was sown.
So, after 13 years in corporate human resource management Kalpana Bansal quit Mudra as the Executive VP of the LLC division. Armed with an intimate understanding of the business, a great network, and a laptop, she started her own human resource consultancy business from home, in May 2006.
Early indications were great: "My first business walked in two days after I set shop up, from an earlier client, and things began from there."
The business was off to a smooth start, but Kalpana ran into some unexpected challenges. "I think women pull down women," she says. "Teachers expected me to be there for the PTA of my children." Her two children are nine and seven years old. "Some of my neighbors told me I was lazy and had no focus, just because I was being an entrepreneur and spending more time at work." Kalpana, however, remained driven by the opportunity she could see.
So many sectors of India's economy are growing by 15 percent or more each year, Kalpana explained, "so there's shortage of talent in virtually every vertical." On top of that, things are changing fast in the markets, so "people need to keep learning and retraining." According to Kalpana, the human resource management sector in India is worth Rs. 70,000 crores. Within that, the training segment alone is worth over Rs. 3,000 crores annually.
Kalpana started by consulting with clients, and then rapidly expanded into training and assessment. "I was sitting with a client who also wanted training services to be included. We started training due to the client pull," she says.
The two businesses complement each other in more than one way. The combination provides a full suite of services for clients. And "the consulting company is an expertise-driven model while the training company is a scalable model of bulk business," Kalpana explains.
Beanstalk's customers? Any corporate, NGO, educational trust or even political body that employs people could be a customer. Today, every organization needs to work hard not only to ensure their employees are well trained, but simply to keep them.
Kalpana believes that her biggest competition lies outside the industry. Beanstalk's "major competition today is from alternate sources where money can be spent on employees. This includes travel, holidays, entertainment and eating," she explains. "The competition factor comes up when the same pie is divided amongst many players."
The key to dealing with competition: "Be yourself. Everyone offers services. It's how you do it that makes the difference," she quips. "Also, if the pie increases there is enough for all."
When Kalpana went to an investor, he called up her husband to check on Kalpana and her work. "Would he have called up a man's wife who'd come to him with a business plan?" she asks, still flabbergasted.
Kalpana ended up reaching into her own pocket to start things off. But her creativity in leveraging other resources allowed her to get started without much cash.
Kalpana billed clients 50% advance to cover costs. Her first assignment brought Beanstalk Rs. 45,000. And on a total monthly rent bill of only Rs. 10,000, Beanstalk now has offices in Mumbai, Kuala Lumpur, Delhi and Bangalore -- Kalpana has worked out arrangements with clients in Delhi and Bangalore wherein she uses 3-4 seats in their office.
"In the first two years, a company doesn't require more than 4-5 seats in one location. Only in Mumbai I converted my grandfather's clinic into a 20-seater office," she explains.
At Beanstalk, money comes in directly with the work - a sure steady stream, and Beanstalk "manages decent margins," shared Kalpana. But Kalpana realized that if she wanted to grow very quickly, she would still have to raise outside capital to invest in the business.
She found an investor - 1.6 billion dollar hedge fund - to fuel the expansion of her training company.
Kalpana has freelancers working for her across the country. Only after Beanstalk received funding, did Kalpana hire anyone. "We now have fifteen full-time employees in India, three in Kuala Lumpur, and our JVs have staff in them that support us. With our freelancer base, it would take the number of people to 34," she says.
In addition to her team, there are 'a few good men' who have stood by her. Her father-in-law is her biggest believer and her father is actively involved in Beanstalk today. The third pillar is her mentor Sandeep Singhal, MD Nexus Capital who gave her the initial push saying, "It's time you got out and did things only you can do."
After 18 months, Beanstalk has a strong client base of 31 companies. Beanstalk provides them with a range of services including end-to-end human resource solutions, HR strategy, organization design, compensation structuring and more.
When Kalpana looks at the human resource outsourcing industry, she sees it "spiraling upwards." Kalpana aims to grow the team from 34 to 100 people over the next two years.
"In five years, we want to try and reach $ 500 million US in each segment, and while it seems a big number now, I see the potential in the market for this kind of volume," Kalpana says.
Fear, she says, without a moment of hesitation. More than an external threat, it's the internal dilemma that is her biggest concern. "Fear of scaling up, facing defeat and what could go wrong."
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