India: a temporary workforce hotspot

In this era of technological disruption and evolving market conditions where companies have to chart their talent demands, temporary staffing is fast emerging as a key hiring strategy and is expected to increase its penetration significantly. This has meant that staffing firms have a larger role to play.

India currently has 1.3 million temporary workers in the organised sector. Experts predict that by 2025, 10% of the overall workforce would be working as contingent workers through various staffing companies.

Over the past few years, the Indian temporary staffing industry has grown significantly. This is largely attributed to the change in the mindset of large Indian companies in two ways: one, companies have started increasingly engaging recruitment agencies to meet their HR requirements on account of the growing complexity of doing business and talent challenges; two, they are opting for a temporary staff model to have smaller bench strength to withstand the global economic crisis.

Industries, such as agriculture and agrochemicals, automobile industries, power and energy, FMCG, manufacturing industries, BFSI, telecommunication, hospitality, healthcare and life sciences industries, information technology, ITeS and retail are increasingly looking to bolster their workforces with temporary staff for a variety of projects. They are likely to increasingly depend on staffing agencies to lease them with the required manpower in time.

The Indian Staffing Federation (ISF) attributes the growth of temporary work in India to the changing economic scenario and the demand for talent optimisation. The ISF believes that temporary staffing helps to create new jobs and boost employment by turning available work into jobs that otherwise would not exist.

There is a strong need for India to reform the labour laws of the temporary staffing industry to create more temporary jobs. Temporary staffing in India faces large legislative restrictions on its growth and penetration. It should be unified and simplified. It has also been noted that due to lack of regulation specific to this industry, many unorganised players are not following the guidelines of prevalent labour laws.

It is being suggested that temporary staffing agencies should be registered within a designated central body and should have minimum capital (some identified amount). Companies which default on timely payment of wages or statutory dues are debarred from operating in the sector.

Moreover, India continues to be a market where labour cost is relatively low and competitive, which is partly the reason for the success story of IT and ITeS sector. However, due to rapid rise in the number of technologies and reforms in various sectors, Indian companies are facing huge challenges which are compounded due to the shortage of skilled talent pool.

Though the success of the Indian industry during the last five years has been modest, the biggest challenge they face is to recruit the right talent and retain it. Furthermore, in light of the current economic situation, it remains a challenge to define the size of the workforce, as projects or order demands tend to fluctuate.

Such challenges have led to the concept of contract or temporary hiring. But it is not a new concept, especially in the manufacturing and service sector. However, in the last decade, the IT and ITES sector has witnessed a significant rise in the contract/ temporary hiring.

Companies need flexibility to remain competitive, and in the absence of the right environment that supports flexibility in an organised manner, work tends to go casual thereby denying the employee a secure job. A few other challenges faced by India’s temporary staffing, which are more of operational challenges, are:

• Staffing firms are not entirely ready for great turnkey ventures and managed facilities.

• Uncertain duration of the projects/unplanned attrition and roll-offs of contacts affect the productivity of the employment firm.

• The phase of associate engagement still remains a subject of concern for all staffing firms.

• Cyclical requirements are causing unexpected retention cost.

While the temporary employment industry is transforming quickly from helping the blue-collared workers to IT/ITeS workforce, it is still a taboo to be a contract employee. While it is no more a distasteful choice to be a temporary or contract worker, permanent employment is still preferred amongst the candidates.

Having said that, we are moving in the right direction and the change and maturity are noteworthy in this industry — the job market is changing fast in India and the best words like gratuity, loyalty, career building, longevity, etc are turning to be old school thoughts.

(The writer is Associate Director, Professional Staffing and Perm — IT, The Adecco Group India)