Overview of The Inidan Staffing Market 20200721

APAC
Market Information and Forecasts
Overview of the Indian Staffing Market

21 July 2020 | Adam Pode, Director of Research, EMEA and Asia-Pacific |apode@staffingindustry.com
Overview of the Indian Staffing Market | 21 July 2020
Key Findings
• The vast majority of Indians work in the unorganised or ‘informal’ sector. Formal sector This report is designed to help
employment totalled 74.9 million in 2018, only 16% of the workforce (see page 3). you understand the structure of,
and trends impacting, the
• Before COVID-19 the Indian Staffing Federation (ISF) estimated that 11.03 million more Indian Staffing Market
jobs will move from informal to formal between 2018-21 moving the total formal
number to 102 million, a compound annual growth rate (CAGR) of 10.8% (see page4).
• Between 2015 and 2018 the Tripartite or ‘Flexi’ workforce (as temporary staffing is
referred to in India) has increased by 1.2 million to 3.3 million. Two-thirds of this
increase (0.8 million) was due to a variety of policy and reform issues (see page 6).
• Before the COVID-19 outbreak, the ISF estimated that temporary staffing would grow
at 22.7% between 2018-2021 to reach a 6.1 million workforce (see page 5).
• Nearly half (48%) of the temporary workforce in 2018 came from the top four verticals:
IT and IT Enabled Services (ITeS), Banking, financial services and insurance (BFSI),
Logistics & Transport, and Government contributing a cumulative total of over 1.57
million jobs (see page 7).
• Andhra Pradesh and Telangana top the list of states in terms of favourable business
environment, West Bengal and Tamil Nadu are much lower on the list (see page 8).
• Many Indian staffing companies have gradually diversified from offering pure staffing
solutions to becoming ‘One-stop HR shops’ catering to the entire human resource
needs of any given company or industry (see page 9).
• The Indian economy had started to recover from the troughs experienced in April 2020
when the COVID-19 lockdown was at its severest and many sectors seemed to be
adjusting to the new normal (page 10 onward).
• This report should be read in conjunction with Largest Staffing Firms in India report and
Indian Salary Survey, which will be published soon.
Confidential Report – NOT for Distribution | © Crain Communications Inc. All rights reserved. 2
Demography
• The Indian labour market is quite unique in that approximately 84% of Indian Employment Structure by numbers (2018)
the workforce works in the unorganised or ‘informal’ sector. This covers
home-based work, self-employment, employment in household
enterprises, small units, agricultural work, labour on construction sites,
domestic work, and a myriad of other forms of casual or temporary
employment with no contracts, employment benefits, employment
protections or social security. Only 16% of the workforce works in the
organised or ‘formal’ sector. Since the introduction of government
reforms in 2016, the formal sector saw growth of 2.7% in 2018.
• As illustrated in the chart to the right, formal sector employment totalled
74.9 million in 2018, adding 19.9 million jobs since 2015 at a
compounded annual growth rate (CAGR) of 10.8% over the three years.
• Temporary agency staffing is the ‘tripartite’ component of fixed-term
contract work referred to in the chart to the right developed by the ISF.
Tripartite refers to the three-part relationship between the temporary
worker, staffing agency and client.
• The Indian temporary staffing industry comprises approximately 3.3
million workers in 2018, or 4.4% of formal employment. The temporary
penetration rate is 0.7% of the labour force compared to 0.5% in 2015.
• The ISF forecast that temporary agency staffing would grow at a CAGR of
22.7% from 2018 -2021 to reach 6.1 million flexi-staffers. Based on
numbers of workers, this would make India the fourth largest temporary
staffing market in the world behind the US, China and Japan in terms of
people.
• There are three types of flexi staffing Professional, General (White Collar)
and General (Blue Collar). Still, flexi jobs in India tend to be focused on
the lower end of the skill spectrum such as data operations, accounts, Source: ISF & SIA
sales, back-end operations, administration and marketing.
Job Formalisation
Before COVID-19 the ISF estimated that 11.03 million more jobs will move from informal to formal between 2018-2021 moving the
total formal number to 102 million, a CAGR of 10.8%. Due to the impact of the reforms set out below and discussed further on page 6.
Ranking based on the percentage of jobs formalised due to the reform
Source: ISF
Flexi Change
Between 2015 and 2018 the Tripartite (Flexi) workforce has increased by 1.2 million to 3.3 million. Two-thirds of this increase (0.8
million) was due to policies/reforms shown below and discussed on the next page. These changes also account for a 7.06 million jobs
shifted from informal to formal.
The estimated total number of jobs that will be formalised by recent labour reforms between 2018-2021 is 11 million. This means
there will be formal workforce of 102 million by 2021. The number of flexi jobs formalized is estimated to be 1.53 million for the same
period. Of course these number may be affected by COVID-19.
According to payroll data from the Employees’ Provident Fund Organisation, formal employment in India grew by 28.6% in 2019-2020.
Sectors with an increase of over 50% are hospitality and financial institutions while textiles has witnessed a jump of 20%.
Source: ISF
Policies and Reforms
• Employees Provident Fund (EPF) Reform – The government is increasing its contribution to the EPF. The scheme is expected to
not only increase employment and ensure social security for employees but encourage formal jobs (launch: August 2016).
• Employees’ State Insurance Central (ESIC) Reform - Improved existing maternity welfare benefits for women who have insurance.
Staffing companies are ensuring the success of implementation by ensuring fair inclusion through various educational camps and
initiatives to enhance job formalization (launch: December 2016).
• Goods & Services Tax (GST) Reform - GST is acting as an incentive for companies to be part of the formal tax structure in order to
get the benefits, thereby facilitating job formalization (launch: July 2017).
• Skill India Initiative - The government pays training and assessment fees under the scheme. Approximately 110 million additional
skilled manpower required by 2022 across sectors in India. Staffing companies will play a vital role in bridging this gap in the
workforce by providing skilled resources (approved for 2016-2020).
• Demonetization Reform -Demonetization forced enterprises to be tax compliant and operate in a cashless manner. This, in
theory, has helped in formalization of the large informal economy (launch: February 2017).
• Fixed Term Contract Reform – Fixed-term workers are eligible for all statutory benefits available to a permanent employee. Plus
work hours, wages, allowances and benefits to be at par. This helps in the growth of the formal fixed-term contract market,
including flexi staffing and will motivate employers to reduce their informal workforce (launch: March 2018).
• Maternity Benefit Reform - The amendment is expected to reduce the instances of employees dropping out of the labour force
due to the absence of adequate leave. The Informal sector may see this government contribution as a motivation to increase job
formalization (launch: March 2017).
Temporary staffing by industry

• An ISF survey conducted in 2018 suggests nearly half (48%) of the total Flexi staffing employment by industry (2018)
flexi workforce came from the top four verticals: IT and IT Enabled
Services (0.5 million), Banking, financial services and insurance (0.41
million), Logistics & Transport (0.39 million) and Government (0.27
million), contributing a cumulative total of over 1.57 million jobs. 15%
• It was estimated before COVID-19 that the top seven sectors would
account for 63% of the total flexi workforce by 2021 contributing a 37%
cumulative total jobs of just under 4.4 million jobs: 12%
o Logistics & Transportation - over 0.81 million new workers
o Banking, Financial Services & insurance - 0.73 million new workers 12%
o IT and IT Enabled Services - 0.72 million new workers
o Retail - 0.6 million new workers
5% 6% 8%
o Government - 0.55 million new workers 5%
o E-Commerce - 0.55 million new workers
o Automotive - 0.42 million new workers
IT/Ites BFSI
• Sectors covered by the ‘Other’ in 2021 will contribute 1.7 million jobs :
Logistics & Transport Government
• Infrastructure - 0.40 million Retail Automostive
• Fast Moving Consumer Durables & Fast Moving Consumer Goods -
E-Commerce Other
0.30 million
• Education/Training - 0.27 million, Source: ISF
• Manufacturing (Non-Machinery) - 0.23 million
• Manufacturing (Machinery) - 0.22 million
• Pharma and Healthcare - 0.15 million
• Media & Entertainment - 0.08 million
• Telecoms - 0.05 million.
All figures are as of the end of the calendar year.
States
• Andhra Pradesh and Telangana top the list of States in terms of
favourable business environment according to the ISF. The availability of
resources is high and minimum wages comparatively low at INR 327
(USD 4.79) in 2018. IT, Thermal Power Energy, and Steel Manufacturing National Capital
are some of the critical verticals hiring flexi workforce. Hyderabad, Territory
Visakhapatnam and Vijayawada are the major contributors for flexi of Delhi (NCT)
staffing in the region.

• In Haryana, Gurgaon is driving flexi-staffing owing to its superior IT Uttar
Haryana
infrastructure. Minimum wages for unskilled and skilled labour has Pradesh
recently been increased, which will attract workers. Haryana is
experiencing high growth of over 10% in terms of Gross Value Added Gujarat Madhya Pradesh West
in the transportation and logistics segment. Bengal
• Construction and manufacturing are particularly strong in Gujarat. The

Directorate of Employment & Training has initiated programs to provide Maharashta
training to unskilled labours and bring them into the mainstream. In Telangana
addition, tax relaxation is helping the manufacturing hub.
Andhra
• In Madhya Pradesh, Indore, Bhopal and Gwalior are the principal cities Pradesh
Karnataka
contributing to flexi staffing. Manufacturing-machinery, automotive
and IT, ITeS are significant sectors that are picking up. Minimum wages
of labours are low at INR 320 (USD 4.69) Tamil
Nadu
• IT/ITeS, Retail and Logistics are vital sectors driving flexi adoption in
Karnataka. Bangalore, the silicon valley for India, is a major contributing
city for flexi-staffing. The states Startup Policy 2015-2020 is expected to
boost the ecosystem and create more jobs. Minimum wages of labours
are relatively high at INR 565 (USD 8.28).
• States with medium to low growth potential for flexi staffing include Uttar Pradesh and neighbouring Delhi (in part because of the
high cost of hiring) Maharashtra, West Bengal which lacks initiatives to contribute to flexi staffing growth, and Tamil Nadu.
HR Solutions
• Like staffing agencies in other parts of the world, Indian staffing firms offer Range of services offered by
permanent recruitment (direct hire) solutions as well as the provision of staffing Intermediaries
temporary staffing.
• In addition, many Indian staffing companies have gradually diversified from Permanent Recruitment
offering pure staffing solutions to becoming ‘One-stop HR shops’ catering to Executive Search
the entire human resource needs of any given company or industry.
• These companies have restructured their service portfolio accordingly and Recruitment
included additional services such as talent management, payroll and advisory Flexi Staffing
services in a bid to emerge as more holistic solution providers.
Professional
• Arguably, the closer client relationships afforded by this more comprehensive
service portfolio enables these agencies to better understand their clients’ White Collar
needs which has an advantage regarding their ability to match the
requirements of employers with employees. Blue Collar
• The diagram to the right breaks down the three major segments offered by HR Solutions
Indian staffing intermediaries as they are described locally into: Permanent
Recruitment, Flexi Staffing (which is the more commonly used term in India for Consulting
temporary staffing) and HR Solutions (Other) in orange into their constituent
Outsourcing
elements.
• Staffing Industry Analysts would typically refer to Commercial Staffing (broken Training
down into Office Administration and Light Industrial rather than ‘White Collar Talent
and Blue Collar’); however, we have opted for the more common local
descriptions within this report.
• Data on the average length of assignments, gender and age distribution,
education and skills of flexi workers are available in the ISF’s Social Impact of
Organised Staffing Industry 2020 report.
Market conditions and COVID-19
• The first case of COVID-19 in India was reported on 30 January 2020, and Confirmed COVID-19 Cases
the curve continues to increase. To date, India currently has the largest
number of confirmed cases in Asia; and the third-highest number of
confirmed cases in the world after the United States and Brazil with over
1,155,338 on 21 July according to John. However, India's reported fatality
rate is much lower at 21 reported deaths per million compared to 431 in
the US and 683 in the UK, according to the same source
• India was in lockdown from 22 March until 1 June since when the
Government has started " Unlock 1.0 ". The lockdown hit the informal
sector particularly hard. Data from the Centre for Monitoring Indian
Economy shows that, out of the 122,000,000 people who lost jobs in
April, 75% were small traders and daily wage labourers. June 2020
witnessed a rapid drop in unemployment after being 23.5% in April and
May, to 11.6% in the 2nd week of June.
• Another key feature of the crisis is a historic reverse-migration to rural
regions with millions of Indians leaving the major urban areas. For
example, an estimated one million workers have left Bengaluru since the Source: Google
beginning of the lockdown.
• The Indian economy had started to recover from the troughs experienced in April 2020. When the lockdown was at its severest;
and many sectors seemed to be adjusting to the new normal. Driving activity from Apple, which is one measure of economic
recovery, is now well above the level seen in January (see graph on page 11) even though cases have continued to grow. The
Naukri JobSpeak Index for June 2020, saw a 33% improvement in hiring activity compared to May 2020. However, when we
looked at year-on-year comparisons, hiring activity is still down by 44% in June 2020 compared to June 2019 (see the Appendix).
• There remain concerns based on the re-imposition of localised lockdowns in several states such as Bihar, and Uttar Pradesh
which may interrupt the country’s recovery.
• See SIA’s Global Staffing Industry Forecast (May 2020 Update) for our 2020 and 2021 forecasts for the Indian staffing market
Market conditions and COVID-19: Industry comments
• “We are seeing an escalation in the hiring of sectors such as education, healthcare and pharma, e-grocers and delivery apps, security
management, fintech and cybersecurity. The hiring is happening in reaction to demand and not pre-empting demand,” said Rituparna
Chakraborty, TeamLease Services co-founder and EVP.
• Lohit Bhatia, president, India Staffing Federation, observed that hiring has begun in the FMCG space and e-commerce platforms and
demand is coming in from the BFSI segment and also pharmaceuticals, cement and steel. The pace, he said, will pick up in the next
two-three weeks. “As factories and offices start opening, the companies get a sense of how much of the workforce is still available to
come back to work and how many have left the cities. Our estimate is a lot of gaps will need to be filled as the work begins,” he said.
• Industry executives say hiring is more focused on the contractual workforce because of the flexibility afforded in the COVID-19
environment. Lohit Bhatia said: “Apart from the above reasons, festive demand too is expected to pick up by August and with more
factories starting to open up in key markets like Delhi, Mumbai and Chennai, the demand-supply of labour workforce will have to be
addressed”.
• Aditya Narayan Mishra, CEO of CIEL HR Services, pointed out there is good demand in the mid- to-junior levels for people with 1 to
f10 years of experience. “This is understandable because companies will need some hands to keep moving the machinery,” he said.
Economic Activity and COVID-19 Cases
140 250,000
120
200,000
Apple Driving Index
COVID-19 Cases
100
80 150,000
60 100,000
40
50,000
20
0 0
5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29
2020: Week 5 to Week 29
New cases Driving Index Source: WHO, Apple & SIA
Market conditions and COVID-19: Hiring activity
• Hiring across cities saw a double-digit dip during June 2020 year-on- June 2020 hiring by city compared to prior year
year.
• For the two largest cities, recruitment in Mumbai decreased by 56%
and 54% for the Delhi National Capital Region. Hiring activity in
hospitality was most impacted down 88% and 85% respectively. Hiring
in accountancy declined by 60% and 57%.
• Hiring activity in other major cities (see graphic to right) fell between
52% and 42% year on year. Elsewhere, Vadodara was down -54%,
Ahmedabad (-51%), Coimbatore (-41%), Jaipur (-34%), Chandigarh (-
28%) and Ernakulam (-23%)
• The good news, however, is that hiring activity has leapt 74% in Kolkata
between May and June. Ahmedabad is up 51%, Coimbatore (47%),
Ernakulam (44%), Pune (43%), Hyderabad (32%), Delhi & Vadodara
(30%), Jaipur (24%), Chennai & Mumbai (22%) and Bengaluru (21%)
and Chandigarh (17%),
• Hiring across experience levels remained well down in June 2020 as
compared to June 2019.
• The hiring for entry-level executives (0-3 yrs. exp.) and senior-level
executives (4-7 yrs. exp.) saw a dip of 47% and 44% respectively. Source: Naukri
• Middle management roles (8-12 yrs. exp.) declined by 43%, senior
management roles (13-16 yrs. exp.) declined by 38% and leadership
roles (16+ yrs. exp.) declined by 33%.
• Date for industry sectors is on the next two pages.
Sectorial Data for June 2020 (Part 1)

June 2020 hiring by sector
150%
100%
50%
0%
-50%
-100%
Year on Year Month on Month
Source: Naukri
Sectorial Data for June 2020 (Part 2)

June 2020 hiring by sector
80%
60%
40%
20%
0%
-20%
-40%
-60%
Year on Year Month on Month
Source: Naukri
About Staffing Industry Analysts (SIA)

Founded in 1989, SIA is the global advisor on staffing and workforce solutions. Our proprietary research covers all categories of
employed and non-employed work including temporary staffing, independent contracting and other types of contingent labour.
SIA’s independent and objective analysis provides insights into the services and suppliers operating in the workforce solutions
ecosystem including staffing firms, managed service providers, recruitment process outsourcers, payrolling/compliance firms
and talent acquisition technology specialists such as vendor management systems, online staffing platforms, crowdsourcing
and online work services. We also provide training and accreditation with our unique Certified Contingent Workforce Professional
(CCWP) program.
Known for our award-winning content, data, support tools, publications, executive conferences and events, we help both suppliers
and buyers of workforce solutions make better-informed decisions that improve business results and minimise risk. As a division of
the international business media company, Crain Communications Inc., SIA is headquartered in Mountain View, California, with
offices in London, England.
For more information: www.staffingindustry.com
Global coverage across the workforce solutions ecosystem, and latest SIA research and related news, follow us
@SIAnalysts, @SIAResearch and connect via
PROPRIETARY DATA, DO NOT DISTRIBUTE OUTSIDE YOUR ORGANIZATION. Your company’s use of this report precludes distribution of its contents, in whole or in part, to other companies or individuals outside your organization
in any form – electronic, written or verbal – without the express written permission of Staffing Industry Analysts. It is your organization’s responsibility to maintain and protect the confidentiality of this report.
Staffing Industry Analysts | 1975 W. El Camino Real, Ste. 304 | Mountain View, CA 94040 | 800.950.9496 | www.staffingindustry .com

Overview of The Inidan Staffing Market 20200721

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Overview of The Inidan Staffing Market 20200721

Uploaded by

Copyright:

Available Formats

APAC

Market Information and Forecasts

Overview of the Indian Staffing Market

Ranking based on the percentage of jobs formalised due to the reform

Policies and Reforms

Temporary staffing by industry

staffing in the region.

• Construction and manufacturing are particularly strong in Gujarat. The

Market conditions and COVID-19

Market conditions and COVID-19: Industry comments

Market conditions and COVID-19: Hiring activity

Sectorial Data for June 2020 (Part 1)

Year on Year Month on Month

Sectorial Data for June 2020 (Part 2)

Year on Year Month on Month

About Staffing Industry Analysts (SIA)

For more information: www.staffingindustry.com

You might also like