Flexible Employment in India: A Rising Trend

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The increase in flexible employment is a trend that is seen for quite some time now in many countries, including India. Why there has been a rise in flexible staffing in a country like India where people till a few years back were accustomed to a regular 9 to 6 job?

What is flexible employment?

Flexible working is a method of working that is customized to suit the needs of the employee. It is an alternative to traditional set pattern of working for 8 to 9 hours. The best part is that the employees can work from home or at flexible hours or for a limited time period for a particular project. For employers, the advantage is that you hire employees for a temporary period, which in turn reduces the operational and management costs of permanent employees. In a report published in Livemint (CIETT Economic Report 2016, Motilal Oswal Securities), while the average global flexi staffing penetration was at approximately 1.6%, India’s flexi staffing penetration was just at approximately 0.5%. However, the scenario will be a much better one with the recent implementation of the goods and services tax (GST) and the Indian organized flexi-staffing sector is set to grow much bigger as more and more organizations in India are nowadays opting for flexible staffing.

India Staffing Services

Source: http://www.zyoin.com/wp-content/uploads/2014/05/Indian-Staffing-Industry-Fig-1.png

How will GST help?

With GST scenario, the organizations or the clients can take input tax credit from the government only if the flexible staffing agency that provides services the client pays the service tax to the government. This will compel more and more firms to move to staffing agencies that are organized and comply with rules and pay taxes.

Benefits of flexible staffing

According to the opinion of expert analysts at Motilal Oswal Securities Ltd, if the central government takes up exhaustive labour law reform, flexi staffing is expected to be relatively cheaper. According to brokerage firm Ambit Capital Pvt. Ltd, flexible staffing is much more cheaper than permanent recruitment which includes the cost on an average life time of an employee in an organization.

Flexible employment is beneficial in both ways: Firms hiring flexi staffing services are benefitted as it will save on employee costs and it also has the flexibility of hiring as and when required. Firms offering flexible services or individuals on flexible jobs also gain as they can work on more than one project as per their convenient time and can earn more.

Madan Sabnavis, chief economist at CARE Ratings pointed out that in the present scenario in the country where job opportunities are not going hand-in-hand with the rise in the working population, a rise in temporary staffing, flexible jobs, part-time jobs should be seen as a positive sign as it is always better to remain employed for few months than to remain completely unemployed. It is also seen that one-fifth of the employees who take up temporary jobs get absorbed into the organization sooner or later.

Rising trend

Organisations in today’s age need to be more flexible so as to accommodate market changes. The flexible staffing market in India is on its way for rapid growth and in few years, Indian staffing market will be the largest in the world. According to industry reports, the temporary or flexible jobs’ workforce is likely to account for 10% of the country’s formal sector employment by 2025. India has one of the largest flexi staffing employee numbers in the world, next only to China and the US. India can very well surpass other countries considering the size of temporary staff employed in the organised sector in the next 10 years.

Indian organizations of various industry domains are hiring employees on a contract basis nowadays. Though such contractual jobs are usually of jobs at the lower end of the hierarchy, like as accounting, sales, data entry, backend operations, and regular administrative tasks, however flexible job recruitment has also started to include mid-and senior-level roles in IT, engineering and retail sector among others. The retail sector is expected to grow at 10 to 12% per annum, making it the most lucrative option for a huge growth in flexible staffing. At present, the government of India employs a temporary workforce of about 12.3 million and this figure is expected to grow more. Contract staffing in the IT and ITES industry is also likely to increase from 10 to 20% in the next few years.

Needless to say, firms which are engaged in the flexi staffing business in India will benefit.

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