Temping – A Booming Business
(PRWEB) February 8, 2004
Temping or Interim Staffing as a concept is more than a decade old. While in some countries, for years corporate have used to this to create flexibility in their knowledge and labor costs, in the Indian scenario this concept is still nascent. One therefore sees a large mindset gap between the Indian and International HR fraternity. Part reason for this gap is the ambiguous labor laws of our country.
Turning to the size of the global temporary staffing industry, it is not surprising that there is almost no agreement amongst temporary staffing agencies, industry analysts, trade bodies, labour unions or governments. One way of measuring it is in terms of Market size. By Deloitte and Touche (1998), the size of the global temporary staffing industry is 125 billion Euros, or 113 billion US dollars. This total is broken down into four regional figures. For the US the industry is estimated to be worth $ 49 billion,for the EU 15 it is estimated to be worth $ 47 billion, for Japan it is estimated to be worth $ 8 billion, and the rest of the countries of the world are grouped together as �Other�, with a value of $ 9 billion. On the other hand, the American Staffing Association (ASA) have estimated that total temporary help receipts in the US in 1998 amounted to $ 53.9 billion, some $ 4 billion more than other studies. And in 2000 this had risen to $ 63.6 billion (Brogan 2001). According to a recent study By Deloitte and Touché (2003), the size of the global temporary staffing industry is $ 140 billion.
The hot spot in the figure for India is the piece of cake reflecting 9%. The total revenue of domestic staffing companies is at Rs. 100 crore and the growth is galloping at a whopping rate of 75%. Over 5 million people are employed across the globe as temps and IndiaÂ?s potential across all sectors is about 8-10 million jobs. India definitely holds the potential of grabbing the entire piece of cake. The Indian perception for recruitment has been changing lately, this can be clearly inferred by the rapid growth of e-recruitment market. Growing at a pace of about 100 to 150 percent, this recruitment mode promises to increase its share from the present 2% to 10% in the next 3-4 years. Presently, the total Indian recruitment market is somewhere roughly around Rs 500-600 crores. According to the US-based Forrester Research, the online recruitment market in 1999 was worth approximately US $ 265 million, which was expected to grow to US $ 1.7 billion by 2003 end. Further the report also forecasts that by 2003 end, 100% of the large companies, 60% of the medium sized companies, and 20% of small companies will recruit online. This fact gets more strengthened if we look at the growth of e-recruitment in the Indian scenario.
How it all started?
Since the early 1970s the US temporary staffing industry has experienced double-digit growth rates. By 1976 the temporary staffing payroll reached $ 1 billion. Having taken almost thirty years to top a billion dollars, the industry reached a $ 5 billion payroll in eight years, in 1984. Only four years later, and the revenues generated by the US industry were worth over $ 10 billion. And so it goes on. By 1997 the temporary staffing industryÂ?s payroll exceeded $ 50 billion, and despite the on-set of recession, the payroll had almost doubled again by the end of 2001.
Temporary staffing industries emerged in the 1970s in the UK, France and the Netherlands. Next was Scandinavia and Southern Europe. A little slower to embrace this Americanized model of Â?just-in-timeÂ? labour supply, nevertheless in the last decade countries in both regions have begun to loosen the legislation regulating the business of temporary staffing agencies. So in its first three years the Italian temporary staffing has grown to over three hundred agencies. And finally the third stop: East Asia and South America. Despite performing their business in these regions since the 1960s, it is only in the last couple of years that the largest agencies have thrown their full corporate weight behind efforts to Â?open upÂ? these economies. Many international staffing firms are hoping to tap the nascent market in India for temporary staffing and the outsourcing of other human resource activities.
What it is?
Temporary employees or Â?tempsÂ? hired by recruitment agencies for a client who pays them a portion of the total salary paid to them. MNCs operating in the IT/ITES industry have huge hiring plans but at the same time do not want to take on any support staff in HR, finance, legal or system administration. These companies want to restrict their employee base in India to staff, which can earn them revenues. Therefore these companies use recruitment companies to source temps.
Mr. Vipul Prakash, Head-Talent Search, Elixir Web Solutions, says Â? Temp staffing is designed to provide an organization with more flexibility about the number and type of employees at any given time. Temps are advantageous to firms that are growing, as it provides a sort of selection mechanism Â? people do the work that needs to be done. Employers too have been warming up to temp workers. Hiring temps allows companies to meet upticks in demand Â? and affords the flexibility to respond to the unpredictability of such growth Â? while keeping labor costs under control.
Elixir Web Solutions offer clients end-to-end consulting solutions on the HR front. They strategize along with the client on manpower planning, offer recruitment services, feasibility studies, consulting and payroll services.
A bulk of 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 centers manned entirely by deputees from staffing companies. The recruitment industry is not going to be same again as recruitment companies are tackling the temporary staffing market which is a huge industry in the US but is a completely new revenue stream in India. The temporary staffing business is like an annuity business as the recruitment agency charges a percentage of salary or a fixed fee per month for every employee placed. There is a contract with the company to retain these employees for a fixed period. The agency gets a fixed revenue. Indian companies including Wipro Spectramind, Intelenet, EXL, Daksh, and others are also hiring. Wipro, TCS are all expected to show higher growth for which their hiring plans will be aggressive.
In a typical call center setup almost 20% of the staff is in support. Companies do not want to add this number their headcount. There various staffing agencies Kelly Services, Elixir Web Solutions, Manpower etc. hire these employees and they are deputed to work with these companies. Companies leasing employees prefer to take temps on project basis. Based on the performance of the temp, he or she could become a permanent employee in the same company over time.
Elixir Web Solutions has been consistently on an exponential growth path. Over the last three years their headcount has risen to 100 and as of now they service over 250 clients all across India.
Mr. Kartikaya M Nagar, Head-Outsourcing Department, Elixir Web Solutions revealed, Â?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 paceÂ?. According to him, Â?if a company hires a person and calls the said person as temporary, it still has to put him/her on payroll and insurance. We are in the process of defining a process wherein any temp on the rolls of Elixir Web Solutions will get a medical insurance cover of upto 1 lakh and an accident cover of Rs 15 lakhÂ?.
Consider a company with 100 employees needs another 55 employees because of the new project that they got from a high potential client. The company now has two options, either they recruit 55 people to handle the project or they partner with a staffing agency for hiring temps. Figure Â?AÂ? and Â?BÂ? clearly depicts the fluctuation in the manpower requirement over the year. Figure Â?BÂ? shows that the company utilizes 100 people almost all through the year but if a company hires another 55 people for a high priority project then they utilize the entire workforce only twice a year (Figure Â?AÂ?). Temporary staffing is the one stop solution for companies in such a situation, benefits in the cost component drivers being:
Â? Pay & Benefits Flexibility
Â? Termination Flexibility
Â? Managing Staff Quality
Â? Managing Productivity
While there are positive aspects for the employees or deputees they do face varied issues Â? 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. Some pep-up activities like wishing the employees on their birthdays, opening a bank account for crediting the salary are other positive steps that make employee feel that they belong to the organization.
Thus one sees that increasingly organizations would require timely resources, at a fixed cost for a definite period. In addition to this the resourceÂ?s knowledge and skills have shorter life spans needs to be fully utilized and then upgraded regularly. Hence in order to beat global competition organizations, staffing companies and governmental authorities should gear themselves towards creating intrinsic flexibilities within corporate. Further to continue, the leaders in knowledge Â? based businesses must spend time with promising professionals; get to know them and be known by them, mentor them and listen to them, challenge them. Even encourage them. Even if they are not traditional Â? legal Â? employee, they are still a capital resource for the organization and critical to its business performance.
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