Shyamal Majumdar: Temporary staff, lasting solution

THE HUMAN FACTOR

The largest private sector employer in the world is not a manufacturing giant but Manpower Inc, which has 1.6 million temporary staff on its rolls at its 3,900 offices across the world. Chief executives of Indian staffing solutions companies believe the trend is sure to catch up in India soon.

Listen to Manish Sabharwal, chairman of TeamLease Services: in another three years, TeamLease will have more people on its rolls than any other private sector company in India.

Which means TeamLease, which has 122 clients across seven offices and is expanding to four new locations, expects to employ more people than Tisco, India's largest private sector employer with 43,000 people, by 2007.

That may sound a hugely ambitious target considering that TeamLease, set up in 2002, has around 12,000 employees on its rolls, but the trend is clear. India has around 100,000 temporary workers now, and the market is likely to grow by around 50 per cent annually.

Sensing the huge opportunity, multinational staffing companies like Manpower, Ma Foi, Kelly Services and Adecco SA have already set up bases in India and are growing rapidly.

Ma Foi, for instance, has 8,500 full-time associates and is recruiting 1,200 temps every month. And all the competitors are unanimous in their opinion that the staffing business in India, which has an estimated turnover of around Rs 500 crore, is poised to grow rapidly.

India Inc agrees. Companies like LG, Alcatel, Reliance Infocomm, Bharti Televentures, Du Pont, Pfizer, Dr Reddy's Laboratories, Ford and Titan are appointing temps in large numbers.

An Alcatel executive says the company employs temps on project roll-out kind of assignments, which are short-term in nature. Why? "Managing becomes easier and the delivery is much better," he says.

Temping, however, is the most popular in new-age companies like telecom and IT, which have much less old baggage than established manufacturing companies. "The culture-fit is much better and people in new-age companies come with very specific roles and jobs that are deadline-driven," says an HR consultant.

Advocates of the temp recruitment model say it helps companies to remain agile, enabling them to expand and contract their workforce and their expenses with the ebb and flow of the market. Because companies can select people with the exact skills they are seeking for a specific amount of time, temps are often an ideal, if temporary, solution. More and more companies are beginning to understand what benefits these short-term assignments can bring to an organisation.

This is despite the fact that temping in India is still mostly confined to low-end jobs like billing and so on, unlike in the West where temps are usually hired to fix a critical problem or facilitate a major transition. But Indian staffing companies believe that these are early days yet and the trend will catch up fast in India, too.

TeamLease, for instance, thinks temping allows companies to hire temporary staff to cater to peak demand conditions, hire staff with specialised skills for projects of short duration, or terminate temporary staff when demand falls. If companies were forced to employ only full-time workers on a permanent basis, they would have to either forgo the opportunity to expand production to meet the rise in demand, or incur excess costs for surplus staff during lean periods.

Globally, the temp staffing business, as estimated by consulting firm Deloitte & Touche, is pegged around $140 billion, with markets like Singapore and London considered to be the mature ones. Research has also shown that an uptick in temp jobs precedes an increase in overall employment by three to six months.

Staffing companies also say that temporary staffing helps workers to get jobs and companies to expand their headcount even when market conditions are uncertain. Data from several countries clearly brings out this trend.

For instance, in the US, the manufacturing sector is estimated to have hired only 0.57 million full-time employees between 1992 and 1997, while another 0.5 million temporary jobs were created in the same period, taking the total job creation in manufacturing to 1.07 million.

According to the US-based Employment Policies Institute, if temporary jobs hadn't existed, manufacturers would not have hired so aggressively and production would have been lower by almost one-seventh between 1991 and 1997.

So, CEOs like Sabharwal have every reason to believe that temping is all set to witness an explosive phase of growth in India. What is required is the removal of some legal hurdles like the stipulation that employees in temporary jobs for more than 91 days can claim permanent status. Over to K Chandra Shekhar Rao, the new labour minister.