When temporary hiring becomes an increasingly regular fixture in Indian companies

India’s job market is undergoing a major shift as companies expand contract hiring across the hierarchy, in addition to the usual festive season hiring, as they beef up staffing to take on new projects and control employee costs.

According to HR experts Mint spoke to, contract recruitment is expected to increase by 20% in the coming months, creating 600,000-700,000 jobs across the organized sector.

The need for workers on six-month to one-year contracts emerged against a backdrop of uncertain global economic conditions and war, with low project visibility causing companies to be reluctant to hire well-paid staff.

Contract workers are typically paid less than regular employees and remain on the payroll of the company’s recruiting vendors. Therefore, the company does not have to bear additional employee costs, such as pension contributions.

“Overall consumer spending is lower and long-term hiring by BFSI (banking, financial services and insurance sector) in areas like gold loans is also lower. Rather than recruiting vacancies, companies will be hiring on one-year contracts.” Recruitment firm said Kartik Narayan, CEO, TeamLease Services Ltd.

Narayan added: “FMCG, e-commerce, quick commerce are the main drivers of contract labor growth of 18-20% year-on-year.”

Divya Kurup, business director at recruitment firm Xpheno, expects hiring for seasonal talent to increase by 18-20% compared to 2023.

“We estimate India’s total personnel requirements for this quarter to be between 600,000-700,000. Demand is expected to cover the season starting in October and continuing through January and early February,” Kurup said.

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Showing an upward trend

Manu Saigal, general head of HR at employment consultancy Adecco India, attributes the rise in contract hiring this year to a number of factors.

Saigal explained that companies typically maintain a 70:30 or 50:50 ratio of permanent employees to contract employees, and if they need to staff a short-term project, they prefer to fill positions in the contract department first.

Additionally, the company is expanding in smaller cities through franchisees. He added that since there is little uniformity in talent quality and salary structure among franchises, companies prefer to hire staffing companies that will hire employees on a contract basis and run the entire HR and management process uniformly.

Lohit Bhatia, president of workforce management at staffing firm Quess Corp., added that the increase in the number of contract workers is due to a large number of informal workers, such as those in agriculture and construction, moving to formal employment. Bhatia said these workers want to be part of a company where they can receive provident fund, gratuity and statutory benefits.

There is another reason for the increase in contract hiring. “Today, e-commerce, fast commerce, manufacturing and non-banking financial companies (NBFCs) are actively focusing on small towns. There, they are opening up franchise models and instead of hiring employees on a permanent basis, they are using contract labor,” Bhatia added.

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“Yes, prices have increased,” said Angshu Mallick, managing director and chief executive of Adani Wilmar Ltd, referring to contract hiring at the company, which sells cooking oil and wheat flour under the Fortune brand.

“When you expand your distribution and you have to go direct, you need people… Every week, we have to go to the specialty stores. You need one person for every 200 outlets, and you need a supervisor for every seven or eight people. With the number of outlets As the numbers increase, so will the number of people on the streets and their supervisors,” Malik said.

Adani Wilmar has seen a significant increase in the number of contract sales staff it employs over the past two to three years, particularly in smaller towns and rural markets. In total, the company covers more than 780,000 outlets directly and another 2 million outlets indirectly.

“In urban delivery, our ratio overall is 65-70 per cent (in terms of permanent employees to contract workers),” Malik said. “But tier II and III and rural areas are growing for us and we Enhanced our steps on the streets there. “

Crossover craze

Festivals are another factor that has led to the rush to hire contract workers for a few weeks to a few months – it has now become an annual ritual.

Kuaishou, e-commerce and other consumer-facing companies are rolling out daily rewards, overnight extra payments and bonuses based on attendance during the holiday season to keep up with the growth in shopping.

But the trend emerged earlier. A report by the Indian Employees Federation, an industry body representing more than 100 recruitment companies, showed that employment in India’s general flexible or contract labor industry increased by 19.1% from April to June compared with the same period last year.

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Technology companies and Global Competence Centers (GCCs, the technology arms of multinational companies in India) are also signing up temporary labour, even though they were not previously keen on contract labor in large numbers.

“With less macro visibility, our IT and GCC clients now require contract workers,” said Ans Human Das, CEO and co-founder of talent solutions provider Careernet. “The notice period for contract workers is typically a few weeks; Not 2 months.” – 3 months for regular employees, available for immediate recruitment. “

Das said the GCC may prefer contract workers over permanent labor when looking for employees in the initial stages of establishing a base in India. As for tech companies, some are nearly at capacity and may soon need additional manpower.

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Suneera Tandon contributed reporting.