Here are the five distinctive trends that will impact staffing industry in India

Trying to play the soothsayer of the tribe is a dirty job, but someone has to do it. Drawing insights from several research reports and from my own role as a practitioner have pushed me to conclude that the top priorities for any staffing company at the moment are:

Increasing profitability.

Driving top-line revenue growth.

Improving candidate sourcing.

Their operational strategies should be focussed on:

Improving the management of client relationships.

Expanding into new markets.

Automating and accelerating recruiting and placement processes.

Engaging candidates and improving the candidate experience.

Increasing employment brand development and marketing.

And the key challenges that each staffing organisation is facing today is that of talent shortage, pricing pressure/margin compression and how to leverage automation.

Though in India flexi staffing, or temporary staffing, is yet to gain traction, the industry is beginning to come of age, with incumbent players beginning to focus on new offerings, increasing investment in technology, improving consultative selling capabilities, and focusing on operational efficiencies while also making their presence felt at the right places. Initiatives like goods and services tax (GST), demonetisation and the Real Estate (Regulation and Development) Act have opened up this market for newer entrants, and we are seeing newer staffing players entering the organised staffing sector.

In other words, the staffing industry is all perched to make a new leap.

The staffing industry in India over the past five years has been growing at 20–25% a year. It is showing no signs of slowing down because it continues to be in a structural stage of transformation.

While on the one hand, employers are beginning to show their increased reliance on flexible staffing to meet their business imperatives, the regulatory environment in India is also beginning to ease, making it easier for the employers and the staffing players. The future of the staffing industry is also linked to the job scene in the country. We can address the issues of jobs by firstly enabling farm-to-non-farm movement of labour at a faster rate and secondly formalising the non-farm sector in India.

In addition, India would also need structural reforms, especially in the areas of labour, skill development, and higher education, and an enabling regulatory and macro-economic environment for industries, start-ups, and MSMEs to thrive. To improve the productivity of our enterprises, which will ultimately aid job creation, our policymakers will need to push formalisation, urbanisation, industrialisation, financialisation and human capital.

In the immediate future, we will see acceleration on each of these agendas, which augurs well for the staffing industry.

Apart from these, I see five distinctive trends that will have a bearing on the industry and will drive the next phase of growth:

Skill and talent gap issues in India

India Inc. needs an industry-ready and job-ready workforce but is facing an acute talent and skill crunch. More than 60% of the 8 lakh engineers graduating from technical institutions across the country every year remain unemployed, according to the advisory body, the All India Council for Technical Education.

Up to 39% employers state that attracting and finding quality talent is one of the most challenging aspects.Remember, 90% of jobs are skill-based, and only 2% of the population (in the 15–25 age group) is currently enrolled for vocational training, compared with 60–80% worldwide.This apart, talent attraction, engagement, and retention remain a big challenge for most employers.

Against this grim backdrop, employers are looking at contingent staffing in a big way. This represents a huge business opportunity for the staffing industry. The industry has to play its part as well in addressing the skill and talent issue for the economy as a whole.

Rise of the Gig Economy in India

While the gig economy is in its infancy in India, it is expected to grow in the near future, much like it has grown in the US and other developed markets. A recent study by McKinsey has estimated that up to 20–30% of the workforce in developed markets is engaged in independent work. A recent survey by Flexing It, a platform for independent consultants, indicates that more than a third of the 500-plus organisations surveyed in India expect to rely up to 50% on flexible talent in the next five years. This will have a bearing on the talent strategy of organisations, and therefore should be an important area of focus for the staffing companies in India.

The rise of digital staffing platforms

Given the rise in need for contingent staffing, several digital staffing platforms, such as Upwork, Shiftgig, and Catalant have emerged overseas. These companies match the talent needs of enterprises and the job requirements of individuals in a cost-effective manner. They are expected to be present in India. This represents a risk and an opportunity for traditional staffing companies. While they represent competition, it can also force the traditional players to go digital and look at diversifying their offerings and building or acquiring digital platform capabilities. This will also lead to M&As and consolidation, as the staffing players will look to acquire digital platforms to build scale, reach, and access.

Technology as an enabler and differentiator

Technology will become an important enabler and differentiator for staffing companies. They would need to increase their investments in automation for improving efficiencies and technology for improving the hiring and recruitment processes. For example, AI can help automate up to 75 percent of the recruitment process. Of all the staffing industry trends, AI is ready to shake up the marketplace in terms of efficiency. AI has the ability to focus on candidate skill levels over unconscious biases. It will also help reduce the time for sourcing, keep you organised, and help analyse big data. Clients would also expect staffing firms to provide productive employees, not just employees, and this would mean investment in technology-enabled productivity improvement solutions. Staffing firms will need to invest in automation solutions for time, attendance, and expense management to increase operating efficiency and improve accuracy for compliance and approvals. The growth of contingent labor, the transition from on-premise to software-as-a-service-based solutions, and the heightened awareness for tracking the hourly workforce will create demand for technology-aided solutions. It will become an important source of revenue for staffing companies in the future.

Candidate experience and employee engagement

Given that recruitment is a significant cost element, staffing companies need to improve their talent sourcing capabilities to improve targeting while reducing cost. While investment in recruitment technology will be one aspect of this, they also need to focus on a candidate’s hiring experience. Today, social and digital technologies, coupled with newer forms of engagement and assessment through gamification, provide companies with newer avenues to engage effectively with their candidates. Once hired, companies will need to focus on talent from an employee engagement perspective. Millennials have different aspirations, and they have their own requirements from any employer. So it is important to manage them effectively. Candidate experience and employee engagement are critical to building a strong word-of-mouth for the brand, improve the attractiveness as an employer, and driving referrals. Referrals have emerged as one of the cost effective channels for continent hiring, and it will become critical for staffing companies to tap into this.

In the words of Dwight D Eisenhower, “In preparing for battle, I have always found that plans are useless, but planning is indispensable.”. While we can never predict the future, showing up unprepared shall be inexcusable.


Rituparna Chakraborty

Co-Founder & EVP
TeamLease Services Ltd

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