Contract staffing in India is one of the oldest forms of manpower engagement and has been practiced over several centuries. The early kingdoms used to take people on contract to fight battles and they got a share in the spoils of the battle. Across boundaries contract staffing was used in the field of education, shipbuilding, architecture, town building, art & sculptor, vocational activities and short-medium term manpower needs. We are therefore building on a historical model and mostly reinventing the wheel.
In recent past, contract staffing was in vogue for manufacturing / oil & gas and other core sectors. But it was largely unorganised and did not get noticed. With the boom in the IT sector, contract staffing gained importance and popularity among companies and workforce because of the volume it generated. Contractual hiring is predominantly done for individual positions / specific skill sets / short spurts of manpower needs and sudden demands. The understanding is that the association between the organisation and the employee is for a fixed duration and is subject to renewal.
The primary purpose of temporary staffing remains that organisations want to focus on their core business. The other reasons for contract staffing are:
- Reduction in administrative overheads.
- The organisation does not have liabilities associated with permanent employment.
- The duration of the contract is flexible.
- Flexibility to convert an employee to permanent roles if needed.
- Help companies speed up the hiring process.
- Access to a wider talent pool.
Some of the challenges that the staffing industry faces are:
- Hiring for beyond the tier-2 locations.
- Unplanned roll offs& attrition of associates affecting the profitability of the staffing service provider.
- Seasonal demands resulting in unplanned bench / retention cost.
- Staffing companies are not fully prepared for managed services and large turnkey projects.
- The aspect of associate engagement continues to be a matter of concern for all staffing companies.
The staffing industry is evolving from“a time and material manpower supplier” to an SLA based service.
India is poised for a good growth year and IT contract staffing leads the way in terms of numbers. All the major players in the industry have predicted good growth for the FY 2016-17 and the contractual staffing industry will be a direct beneficiary of this growth. The Retail, e-commerce, Healthcare, Telecom and BFSI sectors are expected to lead the industry’s growth in the next 3 years.
The staffing industry has organised itself to ensure high compliance standards and have built engines for speedy delivery. IT systems have become mature and many leading staffing companies are using social media tools to reach out to associates. According to leading industry reports, the temporary workforce is likely to form about 15% of India’s formal employment in the next 10 years. India has the 3rd largest contract staffing workforce in the world, after China and the US. The Indian government continues to be the largest employer of temporary workforce of about 15 million. This is followed by the IT and IT-enabled-Services and is expected to grow by at least 20% year-on-year in the next 3 years.
The contract staffing industry is evolving rapidly from serving the blue collared workforce to IT/ITeS staff in addition to medium level and niche roles within companies. It is no more a taboo to be a contract employee. The Indian job market is changing rapidly and the premium words like loyalty, permanency, gratuity, long term, moving up the ladder, building a career etc. are becoming old school thoughts. The workforce focuses on quicker & better career options, learning opportunities on the job, upfront remuneration rather than long term wealth creation and job flexibility.
With several policy-related initiatives of the government including the liberalisation of the archaic labour laws, the market share of the temporary workforce will further increase. The staffing industry in India is on a point of inflation. It is the right time for the organised contract staffing firms to tighten the operational capabilities. They have to tech-enable the operations, build engagement platforms for associates & build delivery capacities to scale the new growth trajectory. The industry and customer should be prepared for consolidation of the small players into large players with large companies grappling with the market growth demands. This requires that the EQ of organisations – both Clients and Staffing service providers – must increase to manage the sometimes conflicting demands of this segment, absorb the changes in the environment and handle growth.