IT Contract staffing in India: What is there in future?

Contract Staffiing

With the proliferation of MNC’s coupled with a great rise in domestic entrepreneurial ventures over the last decade has placed India in position where the demand for staffing is like never before. The buzz in the market is that the staffing and recruitment industry in India is expected to grow significantly by 2020, fueled by the need, on the one hand, for a flexible workforce, and on the other, desire from the worker for a mobile, educational and flexible work arrangement.

Recently, Indian Staffing Federation (ISF), The top body of flexi-staffing industry in India comprising of about 30 members from the staffing industry, organized a National Conclave on Staffing – ‘The future of Employment to galvanize the recognition of staffing as a choice of employment both by employers and society’. It was noted that at a time of burgeoning black economy, staffing could be a strategic and cost effective approach taken by the companies.

It is appropriate to note that India is among the top five nations in flexi staffing industry but, it stands out as the only one where the flexi staffing industry does not have a regulatory recognition as yet. Going by the Economic Survey report, it becomes more viable to make necessary provisions, set up guidelines to encourage contract staffing in areas, roles, industries where it can add utmost value.”

India has been projected to be among the largest staffing countries along with Brazil, china and South Africa by the global staffing market. Staffing in India, like other developing countries, is at a very vital juncture as a large proportion of workforce belongs to the unorganized sector having low or almost no social security. From current global experience, the demand for flexi staffing (for providing flexible solutions to both workers and employers) would increase predominantly in the coming years. In 2013, a modest growth rate was noted in the Indian Job market, owing to increasing number of executive search firms and large-scale hiring by the public sector.

According to a report by Staffing Industry Analysts, the Indian staffing industry is estimated at Rs 26,650 crore, wherein flexi (flexible) staffing accounts for 75 per cent and is worth Rs 19,900 crore, permanent recruitment accounts for 12 per cent (worth Rs 3,250 crore) and other services 13 per cent (Rs 3,500 crore).

IT Contract Staffing : Indian Staffing Industry Fig - 1

IT Contract Staffing : Indian Staffing Industry Fig - 2

If we talk about Indian IT Industry specifically, all the major staffing players are foreseeing a big opportunity for entry-level temporary and contract staffing in the Indian information technology (IT) industry. Financial pressures and the subsequent issues like headcount restrictions, because of all these, there is an increasing trend towards contract staffing globally. In the Indian IT industry, some staffing firms are historically doing deployments for lateral talent. However, entry-level temp staffing is yet to start seriously here.

And because of this luring opportunity, major international staffing firms or executive search firms have been taking up staffing in India, considering the growing potential of the market here and due to this trend, we will see a stiff competition in Indian Staffing Industry in coming time. According to the ISF, there are at present 1.3 million temporary resources in the organized sector which is likely to reach to 9 million in number in the next 10 years.

Considering the pace at which the 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. By 2025, it is expected that 10 per cent of the overall workforce in India could be working in a flexible capacity through staffing companies.

According to latest data available in public domain, almost 20% of the software professionals in the developed countries, including the US, are contract staff, while the number is still about 5% in India. This is set to change and the number is expected to touch 20 per cent in India in the next 5 years as the market is quite large.

Under the entry-level IT contract staffing model, companies hire skilled fresher from staffing companies with a convertible option that they would absorb them as permanent employees after 6 months or one year of putting in service.

The trend in contract staffing increasing day by day! The main reason for this trend is to reduce risk factors and as a strategy to mitigate the risk uncertainty associated with the inflow of projects. It is also something to do with the way the companies do their project costing. In reality, contract staffing is more expensive than the regular staffing except that the overhead in expenditure is less. Also, most of the contract staffing is for short term assignments. Generally, no company wants to have regular staff for their 100 percent requirement, and go for contract staff for 30 – 40 percent of the total capacity requirement. This trend will continue irrespective of quality issue because no company will be completely sure of their project inflows. Hence, contract staffing will continue to flourish.