Temporary staffing has come to stay

TRENDS: It's growing at a scorching pace, but still has a long way to go.

The temporary staffing or 'temping' industry globally is valued at more than $200 billion, but Ma Foi Consultants Ltd Managing Director K.

Pandia Rajan estimates it at a mere Rs 1,000 crore in India. But he believes it has the potential to be a Rs 10,000 crore industry in just three years"" provided the government sorts out obstacles that are holding back growth, such as the Contract Labour (Regulation and Abolition) Act 1970.

There are currently 120,000 to 140,000 temporary staff or 'temps' in the Indian organised sector. By 2010 this figure could well soar to one million, according to Soumen Basu, Executive Chairman of Manpower Services India Pvt Ltd, a Gurgaon-based player in temporary staffing solutions and a subsidiary of Manpower Inc of the USA. That means a compound annual growth rate of 60 per cent between now and 2010.

The number of people taking to temping and the number of firms joining in is considerable. Teamlease Services, India's largest staffing company, which currently has 46,000 employees on its live rolls, hopes to ramp up numbers to 100,000 by March 2007.

This, the company says, will enable it to displace Tata Consultancy Services as India's biggest private sector employer sometime in 2007.

"By March 2007 we will be the biggest employer in the private sector, given the present growth rate," says Rajesh A R, Vice-President of Teamlease.

Financial numbers are hard to come by, but in terms of revenues the top three are Teamlease, Vedior and Adecco, according to one industry insider.

In terms of employee numbers there are conflicting claims, but Pandia Rajan says there are five players with more than 10,000 employees on their rolls"" Teamlease, Ma Foi, AdeccoPeopleOne, Manpower and Kelly Services. And the top firms are growing at between 70 per cent and 100 per cent a year.

Companies go in for temporary staffing when they need employees with specific skills to meet identified short-term needs. Associates or temps, as such staff are known, usually have experience of up to three years, and they remain on the rolls of the staffing firm. Companies take on temps for a given period or for a specific project.

When the contract or project ends, temps are either absorbed by the company or go on to another company that would have approached the staffing firm for people. Many new entrants into the job market take up such jobs.

That the Indian market for temporary staffing services (or flexi-staffing, as it is also known) is an attractive one became clear when a slew of global employment services companies entered the country through acquisitions.

Manpower India merged the IT, ITeS and retail financial services business practices of ABC Consultants with its own operations in 2005; Randstad Holding NV acquired a majority holding in Emmay HR and Team4U; Adecco acquired PeopleOne; and Vedior NV acquired Ma Foi.

Temping, says Pandia Rajan, has found greatest acceptance in banking, financial services, insurance, retail, telecom and information technology, but has also made some headway in fast moving consumer goods companies (in areas such as sales, customer servicing and market research) and oil refining.

Banks, Basu of Manpower points out, have outsourced the sales of credit cards, home loans and personal loans to organisations where the required people are found from providers of temps.

The IT sector has seen the temping phenomenon grow smartly in the last five years, Basu explains, because youngsters are now prone to hopping jobs more frequently during the first half a dozen years of their careers. Manpower has also provided temps for the telecom, pharma and healthcare sectors, and now intends to enter newer areas such as retail and media, according to Basu.

Internationally, says Pandia Rajan, the manufacturing sector is the largest user of flexi-staffing, adding that "in India this would be seen as the casualisation of labour." Rajesh of Teamlease adds that the biggest hurdle to using temping as a means of addressing the unemployment issue is the Contract Labour (Regulation and Abolition) Act 1970.

"Temping has got a bad name, but this reputation of the industry is slowly dissipating. There is the fear that it could lead to exploitation, since historically, labourers on contract generally faced exploitation. But, this happened mostly in the case of unskilled labour who were almost always illiterate or semi-literate. But those taking to temping today are all well educated and they know their rights and hence the chance of them being exploited is minimal," says Rajesh.

The space is becoming crowded. The Executive Recruiters Association (ERA) lists 96 members on its website, and Pandia Rajan estimates that half of them are in the flexi-staffing business. Besides, he says, there are hundreds of other, smaller niche players. They may lack staying power, leaving substantial scope for consolidation.

In fact, the flexi-staffing solutions business is highly fragmented, and most players until recently were city-specific players. Now there are large national players such as Teamlease, Ma Foi, Manpower, Kelly Services, Randstad and Adecco.

Many of them are multinationals who have established an Indian presence through an acquisition. Ma Foi, India's pioneer in flexi-staffing, was acquired by Vedior NV, and is itself scouting for smaller firms to acquire.