When was this trend noticed? When did it begin?The top 5 staffing companies in India own just 7 per cent of the total market share (organised + unorganised), and therefore this industry is poised for disruption.
The contract staffing industry is relatively new to the Indian market, about just 10-12 years old. However, the industry is fast making its presence felt with a CAGR of 25% Y-o-Y. India, with its vast population, and decently paced economy provides a thriving ground for this industry. Recently the trend is going excellent with IPOs of TL and Quess Corp, it has been in the limelight for quite a long time.
What is the reason for this trend?
Three big reasons here:
Businesses want to focus on their core business operations and therefore outsource staffing of manpower, thereby doing away with hassles of recruitment and payroll of large staff.
The need to adhere to multiple and complex Indian labour laws.
Third reason is that businesses employ contract manpower to convert their capital expenditure to operational expenditure. A number of startups are using this format as they want to lower the cash flow. IT companies adopting this trend are on the rise too.
What companies are openly adopting this?
Right from the startups to MNCs - most companies are adopting this trend to focus more on their business and increase their productivity.
Is compensation per month for a contractual higher or lower than for a permanent employee?In some of the cases, yes, the compensation per month for a contractual is lower than permanent employee. However, not much disparity is observed between their compensations.
Are the benefits higher or lower for contractual vs. permanent?
A permanent employee does enjoy more company related benefits, but Indian laws have made sure that every contract employee gets basic benefits to enjoy such as PF, insurance etc.
What are the typical job roles that are up for contractual? There are a wide range of job roles in the contract employment format across accounts, front-line sales, back-end operations, promoters/counter sales, telemarketing and delivery boys. That said, there is no real restriction.
What are the average salary and benefits for these roles?Average salary of a contractual staff would range from 8,000 to 14,000 rupees per month for the above mentioned categories. Usually the contracts are for 12 months and extendable. Shorter contract jobs are also coming up.
Are these contracts renewed with the same employee?
Most of the times, yes, since the employers prefer to retain an employee who is well versed with processes. A good employee is often promoted and in some cases also made a permanent employee.
How do companies benefit from this trend? And can high rotation of employees maintain high service quality that the company’s customers want?Multiple companies benefit on multiple grounds. For a few companies contract employment helps to save cost by not having a large HR or payroll team, for others the format helps to keep core head count of the company on the lower side. High rotation doesn’t help any company. However, contract employment isn’t the cause of high rotation. Companies with large entry-level work force on permanent roles also face high churn, such as in banking.
How do contractual blue collar and entry-level employees feel about this trend?
Vishwajeet Gaikwad, 28, has worked in delivery segment for nearly 10 years, currently at Fizzy Foodlabs:I have worked in companies like, Jupo, Amazon, Blue Dart, Sai Courier, Aramax International, SBI and HDFC. I started as a collection executive and then switched to delivery boy for better payments. The current contract will end on 2nd January, 2017.
They have treated me well so far. In my career, salary has been a big issue in the past but that is done on time here, and there is a chance of job extension here too.
I’m happy with this contract job, and would like to continue with it. I have good experience in this field and would like to continue till company looks after me.
Mohammed Anzar Siddiqui, 18, just started working in delivery at renowned ecommerce giant:I have just turned 18 years and my permanent driving license. This is my first job and started in the last week of August. I see this job as a good opportunity to earn more than I can anywhere else in a two month contract and it would help me in my diwali celebrations. While they have not promised renewal of contract, I am hoping Aasaanjobs can help me get a new one soon.
I’m happy to start with a contract job of delivery boy for now, but would like to do an office boys’ job on a permanent basis. Not sure I will follow a career in delivery. It is far more challenging for me.
Sachin Shinde, 31, has worked in delivery for 6 years and currently working for BigBasket:I think it’s been good till now compared to my previous companies.This is my third job in delivery; before this I have worked for Flipkart and Jabong. The current contract with Aasaanjobs ends on 12th July, 2017. They have liked my work in the last four months, so looking at an extension with BigBasket itself as my work location is very near to my house.
I have worked on third-party payroll earlier as well. One good thing is that you’re paid nicely and other, better options are available to you as soon as your ongoing contract ends.
Permanent jobs are hard to find in delivery sector as most of the company runs the business on third-party payroll. So let's see how many more years we can take it forward.
BW Reporters
Regina is a reporter for BW Businessworld. In her previous assignments, she has worked with Independent television Network as a news anchor and reporter in Sri Lanka
