Temp staffing grows 25% amid slowdown
Nov 25 2012
Apart from Agro firms, more pharma companies shift to temporary staff
“The economic slowdown had two types of impacts on the temp staffing industry. Early on, all the headhunters were hit as companies axed temporary jobs first while cutting down costs. Over the last one year, however, there was again a rise in the number of contract labour being hired as companies have started to see the value,” said Mohit Gupta – director of TeamLease.
Unlike hiring permanent hands, temp staffing incurs a fixed cost over the stipulated period and hence companies can plan their financials better. For example, when a company hires six full-time employees at least one would quit within the first one month given the mismatch between expectations and reality. Most number of employee exits happens within the first month. The organisation then has to go back to the “drawing board stage” and start the process all over again, he adds.
“Despite the slowdown, the industry has grown slightly above our expectation, at about 25 per cent over the same time last year. Companies continue to have open positions but are delaying offers due to uncertain times. Temp staffing comes in handy at situations like these. Most sectors are taking in temporary staff and some of them that are doing better than the others are pharma and agro industries,” Gupta added.
From chef to chief executive officer, anybody can be hired on a temporary basis. However, a majority of hiring happens at the lower levels. Outsourcing is not about IT and BPO work alone anymore. Facility management and other manpower outsourcing services are evolving as a major outsourcing opportunity, most of which are on contract basis.
Aditya Narayana Mishra, president (staffing) of Randstad, said temp staff has always been a feature of agro-based companies. "The agro-based companies have seasonal operations and therefore it is economical to have temporary staff rather than full timers," he said.
Agro companies apart, temp staff are hugely preferred by the pharma companies, particularly if they have OTC products (over-the-counter) in their portfolio. They are now looking to boost the sales of OTC products through special promotions and are looking to do so with own staff, even for a small period of time.
This apart, some companies are looking to expand to tier II and III cities and temp staff are an easy way, he said adding that the company has placed many candidates in the recent past for such pharma companies.
According to an official of Coromandel International, a fertiliser firm, there will be need for temporary staff in some segments such as handling, cargo, packaging and allied services. The company has more than 10,000 employees and about 45 per cent of them are on contract. There are many who work continuously in the same area. However, the pattern is dependent on the location, plant, proximity to port and availability of other employment options.
Says K Pandia Rajan, president of the Indian Staffing Federation (ISF): “Since last year, government agencies have also started to take in flexible staffing options; multinationals are entering India with massive scale up plans, and the local industry is aligning with global best practices. Once clarity emerges on the legal front with the required flexibility, this industry can easily bring another million people into it.”
ISF is the representative body of temp staffing companies. The size of the organised temp staffing market is about 5-lakh to 6-lakh people. The major players include Adecco, Kelly Services, Manpower and TeamLease. A vast majority of the sector remains unorganised dominated by small regional players. The top 20 staffing firms are part of ISF.
CII data states that the contract labour sector has been growing at an annual rate of at least 30 per cent over the last three years. It presently constitutes about 22 per cent of the total workforce in 12 major sectors including manufacturing, government, retail, hospitality and healthcare. In some of the leading sectors including manufacturing, where there is high degree of outsourcing of low-end jobs, the ratio of permanent to temporary employees is 3:1. This is expected to grow further with clarity in legislation.
Despite increasing numbers in the contract labour industry, legislations continue to be hazy, says C Rajesh, marketing head of Aparajitha, an HR compliance and staffing firm based in Chennai. Every state has a different take on labour laws and employees are not aware of their rights and privileges. The growth in the industry would increase several fold if unorganised players were brought into the mainstream, he adds.
With inputs from B Krishna Mohan in Hyderabad.