Flexi Staffing: A New Chapter in India's Employment Story
The original version of the article was published on 2nd June 2023 in “The Daily Guardian”
In an economic scenario that is fast transitioning from traditional businesses and occupations to modernised and digitalised ventures and job opportunities, the nature of the interactions between employers and employees has witnessed a landmark shift. From job security and permanence, globalisation, usage of the internet, and increased mobility have opened up new avenues for jobs and business across the globe. This has significantly contributed to how individuals perceive and engage with their work. Post the COVID-19 pandemic, the work-from-home scenario further opened up new channels of communication for employees and employers to interact with each other, taking work life out of the traditional office set up.
A result of this is the increase in flexible employment opportunities where both the job seeker and job provider look for non-restrictive ways to engage with each other, focusing on efficiency, skill utilisation, and rationalised pay. This shift is evident in the rise of the flexible or flexi staffing industry over the last few years. A recent report by the Indian Staffing Federation (ISF), the apex body representing flexi staffing companies with over 120 members, sheds light on the nature and trends in flexible employment in India in the last few years.
Sectoral Trends: General Drives Demand as IT segment Declines
An overall comparison of flexi staffing workforce shows a 14 per cent growth in 2022-23 but a drop from the more than 21.9 per cent increase in 2021-22. A closer look at the numbers shows that there was a reverse trend seen in the past three quarters, as flexi staffing in India registered a meagre 0.4 per cent sequential growth in new hiring in the fourth quarter of FY 2022-23. The third quarter of the year witnessed the lowest growth in the last ten quarters. A strong base effect, which saw the year 2021-22 break all records in the creation of new and revival of old jobs, might be that the economy in India and globally finally started to open up in full measure after back-to-back COVID-19 waves. According to ISF, a robust demand for a flexi workforce after the third COVID-19 wave was largely driven by sectors like e-commerce, retail, manufacturing, and Banking, Finance Services and Insurance (BFSI). Over the course of 2021 and 2022, labour demand came from the retail, hospitality, tourism, e-commerce, logistics, banking, and infrastructure sectors.
When breaking down the numbers according to sectors, general flexi staffing which excludes IT flexi staffing recorded a growth of 15.3 per cent in new flexi jobs during FY23, helping add upwards of 1.47 lakh new flexi jobs. This is in spite of an increase in India's unemployment rate in April 2023 to 8.11 per cent, from 7.8 per cent in the previous month. This upward trend in employment was particularly notable in sectors such as e-commerce, logistics, manufacturing, tourism and hospitality, FMCG, consumer durables, and healthcare. On the other hand, the IT flexi staffing segment, known to drive demand in the industry in the initial years, marked a year-on-year contraction of 7.7 per cent in new flexi jobs by the end of the last fiscal year. The decrease in demand in the IT staffing industry can be attributed to geopolitical factors emerging worldwide such as the decline in US markets, the Russia-Ukraine conflict, and the impact of global financial markets. As a result of these events, companies took measures to align their capacities with the demand to deal with emerging market pressures leading to slowing down of hiring.
Flexi Staffing allows Fluidity in Jobs
Flexi staffing as a workforce strategy has gained momentum globally in recent years. Allowing companies to hire staff on a short-term and project basis, it offers cost-effectiveness and efficiency to the company and flexibility to the individual to work on multiple projects at the same time. The non-binding or short-term nature of contracts allows employees to shift between roles, take up multiple projects, and work on their skill sets in the interim. In the Financial Year (FY) 2022-23 the flexi staffing industry registered a 14 per cent year-on-year growth as 1.77 lakh new flexi jobs were added. This, however, is lower than the nearly 2.3 lakh jobs that were added in the flexi industry in 2021-22, resulting in an approximately 22 per cent growth. By March 2023, the total flexi workforce employed by members of the ISF reached 14.4 lakh.
According to the ISF's Annual Flexi Staffing Industry Employment Trend Report 2023, a slowdown in flexi employment in the second half of 2022-23 was primarily due to the decline in employment in the IT sector, a result of the global slowdown and higher interest rates. It is important to note that a large share of growth in flexi staffing before 2022 was in the Information Technology & Informational Technology Enabled Services (IT & ITeS) industry, a consequence first, of the extensive digital connectivity and second, of tech firms' investments in automation procedures. Interestingly, the notable 14 per cent growth in new flexi jobs in 2022-23, in spite of the year-on-year decline in FY 2022-23 is a clear sign of a positive shift in the economy. Increased employment opportunities due to the flexi staffing industry are also a testament to the industry's ability to support the economy at a time when jobs and employment are at an all-time low.
Flexible Employment: Gains vs Losses
According to ISF, flexi staffing as an employment strategy is known to contribute to the formalisation of jobs by reducing the burden on the unorganised sector. Although the industry by nature is organised temporary staffing, it acts as a force multiplier for formal jobs by creating a platform for recognised employment, work choice, compensation, annual benefits, and health benefits for the temporary workforce. Flexi staffing offers employees the option to take upskilling opportunities and learn on the job by working on a variety of projects without the need to tag themselves to one company. The industry, especially the IT segment, is known to help upskill freshers and dropouts, enabling them to become employable and industry-ready.
A shift in the nature of employment in the last few years has also given rise to gig economy workers, most of whom lie outside of the social security net of formal employment. According to the ISF report, flexi staffing mitigates this risk to some extent by providing several benefits to gig economy workers such as flexibility in allowing them to choose when, where, and how much they want to work, including access to a range of job opportunities across sectors. On the industry side, flexi staffing opens up avenues to onboard project-based highly-skilled workers, a fast and efficient job placement process which reduces the time and effort for both workers and employers. Out of the 40 crore employable strength of India, a mere ten per cent or four crore are employed in the organised sector whereas nearly 25 crore remain self-employed. This creates a pool of nearly 11 crore people who are either employed or have the potential to be engaged in the flexi-staffing sector and the unorganised sector.
India has emerged as one of the largest countries for flexi staffing in the world. Companies like Flipkart, Amazon, Swiggy, Zomato, Ola, Urban Company, and other e-commerce businesses are leading the trend in hiring people for shorter periods. However, increasing employment opportunities have not automatically converted into benefits for employees. For a large share of these workers, employment is restricted by tripartite contracts where the onus of the employer-employee relationship is often juggled between the contractor and the employer, leaving little leverage in the hands of the workers. The nature of employment as a whole and lack of unionisation is known to create avenues for exploitation in the form of overtime work, odd working hours, underpay, and no occupational security. A closer look at the nature of flexi employment indicates that it might not help in offering valuable long-term employment opportunities.
Future of Flexi Working
According to Suchita Dutta, executive director of ISF, over the last financial year, the Indian staffing industry provided a significant number of first-time entrants to the job market with their very first formal employment opportunity. According to the industry body, flexi staffing has facilitated employment which is adapted to seasonal, structural, and cyclical changes in the labour market. In a globalised economic scenario where international events reverberate across sectors in the domestic economy, unpredictable changes make a good reason for a blended workforce which includes flexi staff. However, how much this actually benefits the workforce is a key question that demands attention and action from stakeholders such as industry experts, central and state governments, and policymakers. When a large share of the flexible workforce is concentrated in the low-skilled job sector, there is a need to introduce legislative measures related to hiring, firing, occupational security, social security, and working hours. In addition to this, as a larger share of women enter the flexi workforce (evident in women's participation in the flexi workforce at about 24 per cent in FY 2022-23), measures to supervise the industry will offer benefits not just to employees but to families and society as a whole.
Damini Mehta/New Delhi
Contributing Reports by Shubhangi Jain, Swati Sinha, Rounak Tahiliyani and Sreetama Neogi, Researchers at Polstrat
From Polstrat, a non-partisan political consultancy which aims to shift the narrative of political discourse in the country from a problem-centric to a solutions-oriented approach.