Get Ahead on How to Start an Employment Agency or Recruitment Agency in India

How to Start an Employment Agency or Recruitment Agency in India

The number of graduates in India has been on a steep increase every year has brought the spotlight on the importance of recruitment agencies in India. Employment agencies act as the middle person to bridge the gap between employers and employee and handle the task to find the right person for the job. In India, these agencies are authorized to aid both employees locally and abroad under certain prerequisites. With the ever-changing nature of the economy, new recruitment agencies are needed on an urgent basis in India to provide more job opportunities to people. Let’s dive right in on how to start an employment agency or recruitment agency in India.


What Are the Procedures to Start an Employment Agency in India?

As the first step of any business whereby our aspect of focus is on recruitment business, registration of the business is required. The general advice for the registration of this recruitment business is to be in LLP (Limited Liability Partnership) or Private Limited Company. This is due to both these entities offer limited liability protection to the people who manage the recruitment business. Furthermore, this selection of these entities means the hiring business can be carried on even after the promoters decide to leave the firm since these entities provide ease of transferability. This is beneficial to those who manage the recruitment business since recruitment agencies employ a lot of people and compliance with rigid, strict labour laws.

As for tax registration, a recruitment organization needs to acquire GST registration once the annual sales turnover exceeds Rs. 20 lakhs. As soon as the annual sales turnover crosses Rs. 10 lakhs, the imposition of service tax at the rate of 14.00% must be done by the recruitment business, and they must remit the same amount to the government as well. In addition, registration of ESI (Employee State Insurance) is a mandatory requirement for a recruitment firm when the number of people employed exceeds ten people. When it exceeds 20 people, PF (Provident Fund) registration needs to be done.

Apart from the registration and license, it is vital for a person to know the type of recruitment company (e.g., IT, engineering, business, etc.) that he or she wants to venture into and the competitors in the market. Contacts need to be assessed and insightful knowledge is needed to open the recruitment agency and to make it stand out amidst the competitors. Other than that, it is crucial to set up a recruitment firm based on the finances possessed by an individual. The registration of business and license in addition to the cost of starting an office for the recruitment business will incur hefty charges. Therefore, it is essential to do a financial assessment, and it is recommended to seek financial guidance from experts.

When setting up an employment organization, it is important to set up short-term, medium-term and long-term business plans. These plans which are lined up will help the said agency to narrow down their objectives and provide them with a clearer picture of how they would like to move forward with the business. On top of that, it is a must for the firm to have ATS (Applicant Tracking System). This tracking system will assist an employment company to collect data of the candidates and track the progress of the candidates.


How Do I Apply for Recruitment Firm License?

As for a recruitment agency that would like to do hiring for employment in other countries, they need to get a Recruiting Agent (RA) license. In India, the Emigration Act 1983 states that interested parties who wish to employ Indian citizens abroad must be registered with the Protector General of Emigrants (PGE), The Ministry of Overseas Indian Affairs. The conditions for applying the Recruiting Agent license is as follows:

  • Apply for becoming a Recruiting Agent in the prescribed format
  • Demand draft for Rs.25,000 rupees in favour of PAO, MAIO, New Delhi
  • Passport size photos of the promoters
  • Details of the promoters including business activity in the last five years
  • Certified specimen signature of the promoters
  • Asset and liability statement of the promoters
  • Income tax returns of the promoters
  • Degree certificate of the promoters
  • Bank guarantee for a sum of Rs.20 lakhs


Why Should You Start Now?

In recent years, recruitment agencies have bloomed up like mushrooms, but that does not mean there is no room for new recruitment agencies to join in the competition. The surge of unemployment rates, coupled with an increasing number of graduates, has only created more opportunities for new recruitment agencies to bloom up and show their prowess.

How to Start an Employment Agency or Recruitment Agency in India