The allure of a secure job is unlikely to diminish any time soon in India, but the flexi-staffing or contractual labour market is expected to increase in size. In India, the flexi-staffing industry is still at a nascent stage. Penetration within overall employment in India is estimated at about 0.4%, far behind other countries (see chart 1).
The growth potential, though, is healthy. “Size of the flexi-staffing industry—currently estimated at ~1.7 million people and ₹ 20,000 crore—is expected to grow at a healthy ~20-25% compound annual growth rate (CAGR) over FY14-19," rating agency Crisil Ltd said in a note last week. It expects the industry to expand to 4.7 million people and ₹ 62,500 crore by 2018-19.
New sectors such as e-commerce and associated services (for example, logistics) are expected to create incremental demand for flexi-staffing services in future. Currently, the manufacturing industry is the largest driver of flexi-staffing industry (see chart 2), accounting for little less than a third of the total demand in the country, followed by packaged consumer goods and retail at 25%. As the economy grows, these sectors are expected to continue to fuel flexi-staffing demand.
Factors that will boost flexi-staffing demand are growing requirement for skilled labour and, more importantly, implementation of labour law reforms to make it easier to hire temporary labour.
Lastly, the acceptability of this avenue among the workforce, too, needs to increase, shifting away from the current perception of security attached to a permanent job.