Staffing industry needs a policy push
Large companies are cutting down wage cost while start-ups want to hire executives only for a short period. Now, there is a solution for both. Flexi or temporary staffing is fast catching up in India with retail, logistics, FMCG and start-ups with the IT industry taking the lead.
The new labour reforms that the government is pursuing is likely to give a major boost to this concept which is still at a nascent stage in India, compared to matured markets like the US. And recruiters are happy.
Both employees and companies will benefit from flexi-staffing. Employees can work as and when they feel, take a break and rejoin. Companies, for their part, recruit ‘just in demand’ or ‘on a need’ basis, rather than carrying a large bench.
The Indian Staffing Federation (ISF), an association for the recruitment sector, said that flexi-staffing grew at 16.3 per cent to reach 3.3 million in 2018, out of the total 463.4 million total workforce.
This industry is expected to grow at 22.7 per cent to reach 6.1 million strong workforce by 2021, according to a report on the ‘Impact Of Key Reforms On Job Formalisation and Indian Flexi-Staffing Industry 2019’ by ISF.
The industry has witnessed acceleration due to government reforms such as the Goods and Services tax (GST) and demonetisation in 2016, says recruiters.
Best business solution
In the IT industry, for instance, with emerging technologies such as Artificial Intelligence and Big Data, new skill requirements are in demand. Flexi-staffing is a solution to find out the right skill based on project requirement. A flexi-workforce is the solution for being more competitive in the market, without investing a lot.
E-commerce is one of the highest growing verticals in terms of flexi adoption. The seasonality of business is one of the key reasons for which this segment is experiencing such high growth. Tech support and delivery roles are experiencing increased adoption, the report said.
Kamal Karanth, Co-founder, Xpheno, a recruitment company, concurs with the report. He said that over time, the process of temp staffing in India has proved to be one of the best business solutions in the industry, due to work flexibility and easy hiring. While companies can only hire extra employees when required, employees can develop good working experience by working with many companies, within a short period of time.
It’s a win-win for both companies and temp staff. Unlike the traditional hiring, temp employees can get training on new skills and opportunity to learn job functions from grass root level. For companies, recruitment and replacement is easy through temporary staffing.
A company need not bother on issues like motivation, career planning and performance evaluation to temp staff. Temp staff providers like TeamLease will handle these aspects.
Reforming labour laws
Karanth said most of the large staffing companies are already annually growing at 25-30 per cent. Labour reforms will be like huge ‘steroid shot’ for this already accelerated growth. The New Wage Code is already approved. The enacted rules are expected in next 2-4 weeks. It is speculated that the new National Floor Minimum Wages will be introduced soon, he said.
By simplifying and enabling labour laws in favour of contract employment (like abolishing The Contract Labour (Regulation & Abolition) Act, 1970), the adoption of flexi-staffing by companies will increase, more formalisation will take place, post demonetisation and GST the formalisation has increased.
So far, many large companies, especially multinational firms, were a little tentative about adopting flexi-staffing due to grey areas in the law. Making flexi staffing clear and more friendly means they will adopt more. Today, large companies have less than 2-3 per cent of their staff as flexi staff. This would increase to 5-10 per cent (seasonal, non core and front line staff). That is how the growth would come, he said.
Global push for a gig economy
According to Marco Valsecchi, Country Manager and MD, Adecco India, there is a sociological push across the globe towards flexibility in working hours, working spaces and duration of employment. The emergence of marketplaces where in any part of the world, anyone can post his/her availability for a project and put his/her capabilities up for grabs, will create a pressure on the traditional way of looking at flexi staffing.
For example, the gig economy — large numbers of people work part-time or in a temporary position — is a mega trend.
Adecco looks at with great interest globally and it has introduced a platform to make sure this growing business is captured. The platforms for freelance work has increased the availability of freelancers for companies, opening up a market to new entrants which before was relegated to word of mouth.
Benefits of the trend
In a country, where an estimated 83 per cent of the workforce is informal, labour reforms will have a profound impact on flexi-staffing. India is today the fifth largest staffing market globally. Due to policy reforms around 11.03 million jobs shall be formalised from 2018-21.
Most of the contributions to the overall flexi-staff size has come through the introduction of GST and demonetisation with approximately 1.2 million jobs formalised in last two years, said Valsecchi.
Sudeep Sen, Head of Industrial, Manufacturing & Engineering Vertical, TeamLease Services feels the growth in flexi-staffing will be contributed from sectors such as logistics, e-commerce, BFSI, retail, IT and manufacturing.
India is expected to employ approximately 6.1 million flexi-workforce by end of 2021, with the e-commerce sector expected to lead the flexi-workforce growth with over 54 per cent CAGR. This demand can further be increased by formalisation, urbanisation, industrialisation, financialisation, and skilling, he added.