Chennai: India is one of the few countries in the world where the job market shows some promise, though it exemplifies a stark contrast. While permanent workforces are sent out by corporates through voluntary, compulsory or early retirement schemes, the temporary or contract employment is increasing at a stunning pace.

Even the central government is in favour of contract employment. Recently the group of ministers (GoM) on contract labour agreed, in principle, to open up 13 areas, including IT services, for contract employment. Capitalising on this job trend are India's domestic placement agencies, which are fast graduating into staffing companies or as workforce suppliers.

Staffing companies are those that carry people on its rolls and forward them as associates or deputees to work in client organisations, of course for a fee. Such workforces are known as bubble resources (temporary jobs come and go like a bubble), secondment, flexi-staff or simply contract staff. There is even one Fortune 500 US company, Man Power, present in this field.

Says Ajit Isaac, the director and CEO of the Bangalore-based Peopleone Consulting: "With organisations outsourcing their operations, India is one of the few countries where employment is showing an upswing. So it is probable that we will find a larger number of international firms setting up operations in India (See: ).

Not a new concept
Contract labour is nothing new for the industries as all the factories have them. The liberalisation of the economy and the entry of multinational companies (MNCs) saw the trend seeping into the white-collar job market.

"India is a vast market that need more hands. But for MNCs their head count is always related to the turnover. The only way out is to hire temporary staff," says Abhinav Dhawan, director and chief operating officer, Solutions INTG.

The financial services sector (foreign and domestic private banks) was the first to embrace the staffing companies or direct sales agents (DSA) to push their credit cards, and consumer, home or car loans.

Mostly mom-and-pop city-centric outfits, the DSAs were not able to scale up geographically. More than that, they cut corners by paying their employees less than what was initially contracted and also risked their principals by not paying the statutory dues like provident fund (PF).

Such unprofessional attitude naturally resulted in huge attrition rates affecting the principal and thereby providing a platform for bigger players, mainly placement agencies, to step in. For the recruitment agencies already in the business of matching people to their clients, staffing services were the first step towards offering the entire human resource (HR) activity under the business process outsourcing (BPO) model.

"Eight months ago we found a huge potential and I decided to head this division and give personal attention," says Dhawan. Solutions INTG has placed around 1,600 people in different organisations so far.

A lucrative market
The market leader is the Chennai-based Ma Foi Management Consultants, which has placed around 5,300 people so far. The company earned Rs 4.05 crore last year, showing an increase of 73 per cent growth over the previous year. Peopleone Consulting ranks second, having placed over 2,000 people.

A bulk of the temporary placements falls in the junior and middle management level (salary level Rs 5,000-12,000 per month) in IT, financial services, telecom, and FMCG companies at the backend sales or administrative activities. There are call centres manned entirely by deputees from staffing companies.

On the other hand, manufacturing companies generally prefer to have their own employees. "For them employee cost will be a small percentage of the total project cost and they would like to have their own staff," explains Dhawan.

"Staffing companies offer clients end-to-end HR consulting solutions on the HR front. They strategise along with the client on manpower planning, offer recruitment services, feasibility studies, consulting and payroll services," says E Balaji, general manager (staffing solutions), Ma Foi.

Traditionally, corporates engaged cheap contract staff to perform non-core functions. But now the trend is turning for the better as temporary staff is hired even for some crucial functions.

Says Balaji: "Corporates in a transitory or restructuring phase opt for temporary top management level executive(s) to do certain functions. One of our deputees is a top-level executive, drawing a salary of around Rs 85,000 per month."

A Rs 100-crore industry
Though precise numbers are not available as to the industry size and the number of players in the field, Peopleone Consulting's Isaac puts the total revenue of domestic staffing companies at Rs 100 crore and the growth is galloping at a whopping rate of 75 per cent.

The staffing companies work on two revenue models - a percentage (normally ranges between 7 and 20 per cent) of the total earnings of the deputee, and a fixed sum per month per person placed by them.

"The first method is more transparent, resulting in less friction among all the three parties - ourselves, associates, and our clients. We follow this method," says Solutions INTG's Dhawan.

While their fee is based on their associates' earnings, the staffing companies do not offer any performance guarantee. Says Balaji: "In very few projects Ma Foi has agreed for performance guarantees. The hardcore functional training is given by the clients while we give the soft skill training to our deputees."

The 'bench' (having employees on the rolls and waiting for projects) concept is unheard of in the staffing industry as recruitment is project-based and the employment terminates with the project.

Disturbing issues
Success in this zero-tolerance business depends on hiring the right person. "If the client is happy with a deputee, he will continue with the staffing company," says Balaji. Normally companies do not accept projects that are less than one-year duration as getting good employees for a lesser period becomes a difficult task.

While there are positive aspects for the employees or deputees (acquiring wider experience in different industries without corrupting his/her resume) they do face varied issues - uncertainty in employment, discrimination at workplace, confused loyalties. All these could lead to increased attrition. In short, the deputees should be kept happy so that they can deliver better.

But that is a tricky job as they have to answer two bosses - the staffing company that employs them and the company where they are sent to work. Unlike the DSAs the organised players take care to minimise the attrition rates. Nevertheless, financial services and telecom sectors witness heavy attrition rates compared to the manufacturing sector.

Says P S Srikumar, assistant vice-president (marketing and sales), Solutions INTG: "Eighty per cent of the attrition rate is due to hygiene factors like salary not being paid on time and lack of recognition." And companies like Ma Foi, Solutions INTG and Peopleone Consulting make sure that small things are taken care off while they don't mess up with legal compliance.

Feel-good factor
"A payslip make employees very happy as it is the passport for consumer loans. If one takes care of these issues like appointment order, payslips and PF contributions, the attrition rate will come down," adds Srikumar. "Some pep-up activities like wishing the employees on their birthday, opening a bank account for crediting the salary are other positive steps that make employees feel that they belong to the organisation."

For really talented employees, staffing services companies do chart out a career growth path by putting them at a higher position in a different company. Absorption of a deputee by a client is also facilitated after some cooling-off period, but for a fee. "The cooling-off period will be there so that other deputees do not nurture such hopes," says Balaji. There have been instances when the staffing companies themselves have absorbed a deputee.

As the staffing companies try to keep their house clean, discriminatory treatment of deputees at the workplace is a major cause for worry. The deputees could be exploited or given step-motherly treatment. For instance, in one organisation, the temporary staff was not allowed access to the coffee-vending machine resulting in serious heartburn among the staff. The simple example for exploitation at the workplace is the security guards posted at different companies. They are used to fetch water, coffee, photocopying and even to operate the EPBAX machines.

Similarly loyalty is another important issue to tackle as the deputees know their real employer is the staffing company. Agrees Dhawan: "That is one grey area. We have put a programme to build relationship between the deputees and our client."

Finally, with the central government toying with the idea of amending the labour laws to make it more employer-friendly, temporary jobs seem to have become a permanent fixture in the domestic job market. And the day is not far-off when employees will be paid on an hourly basis as in the US.