India to have 10% temporary workforce by 2025

By Ritwik Mukherjee Feb 26 2014

Temporary workforce in India’s organised sector is expected to swell up to 9 million over the next 10 years. The country at present has 1.3 million temporary workers in the organised sector. By 2025, it is expected that 10 per cent of the overall workforce in India could be working in a flexible capacity through various staffing companies, feels ISF.

Executive search companies, head hunters and staffing companies also subscribed to the same view. “Five years back the acceptability of temporary staff was not there in the country but it has recently increased as the temporary staff gets paid better, and at par with their full time employees. The larger difference is that the long term benefits and bonuses are not there in temporary environment and most of the global firms are following the same trend as they follow in their local market in the US and Europe. To support the spike of the need they prefer to hire temporary staff as decision making, availability and joining is faster for the job,” said Sunil Goel, MD, GlobalHunt.

Indian economy and its talent pool is growing as per the global demand and most of the fortune global companies have their captive or outsourced businesses running in India in sector’s like IT and KPO. To match the employment trend in global market it is being observed that most of these firms are opting for large number of temporary workforce to avoid their headcount and long term liabilities. Since the economy keeps fluctuating and needs of the company also keeps changing on a very short duration these companies prefer to have temporary hiring to fulfill the immediate needs and also to strategically decide if they really need full time employee on job or not, said Goel.

Rituparna Chakraborty, VP, ISF, said that by 2025, it is expected that 10 per cent of the overall workforce in India could be working in a flexible capacity throughstaffing companies. Considering the pace at which the flexi staffing industry is growing in India, it can easily outnumber all countries in the next 12 years with the sheer size of flexi-staff deployed in the formal sector, given the opportunity. While admitting that the possibility of temporary workforce growing in India is huge and the opportunity for staffing industry to grow is enormous, T Muralidharan, chairman, TMI group said.

“Yes the temporary workforce in India’s formal sector can grow phenomenally, but only if the existing financial and legislative roadblocks are removed. There are certain issues with regard to service tax, TDS deduction pertaining to staffing companies. Besides, there has to be a proper and structured legal framework about what can be outsources and what cannot be. Once these issues are sorted out, temporary workforce will automatically grow significantly because that makes more sense from the employers’ point of view. Because that will take overhead costs from fixed cost to variable cost and the cost of retrenchment or getting rid of people will be much lower,” said Muralidharan. 

With limited number of jobs and large employable workforce (following lot of skill development activities), employees will also realize that temporary jobs can be a stepping stone for them to get a permanent job. And then the number of temporary workforce will grow even faster.

Kishore V N, co-founder and managing director, Alp Consulting, said, “With the changing labor dynamics in India, we believe that many companies are maintaining a flexible layer internally resulting in a huge surge on the number of flexi or temporary employees. By making more investment on the flexi hiring rather than permanent hiring, companies are able to secure skilled manpower as and when required, can reduce the cost of staff as per the need and can focus more on their core goal.”

“We are expecting the financial sectors and the manufacturing industry to grow exponentially. There is a lot more emphasis on organised agriculture industry, enabling the labour reforms. Though the IT industry is showing a growth sign in employment this year, as compared to past 3 years, but we are seeing much better response from manufacturing and agriculture industry. Moreover, with the Indian working population which is set to grow upto 250 million in the next 20 years, the demand for the flexi employees is going to grow even more than what has been predicted so far,” he added.