Flexi Staffing: Then, Now and the Future

In many industries, employee costs are the most significant outlay for an organisation. In today's volatile economic conditions, balancing between minimising employee overheads and maintaining sufficient human capital to avoid missing out on growth opportunities is a delicate balancing act. When disruptive factors like the post-pandemic 'Great Resignation' and 'Quiet Quitting' and the shortage of skilled labour in some sectors are added, it makes for a challenging situation. How do companies handle this employee hiring conundrum and the constant market churn? The solution is talent on demand, in other words, flexi staffing.

So, what exactly is flexi staffing? As the name suggests, flexi staffing is the temporary employment of people for a particular duration or project. The oldest staffing agency in the world was opened in Britain in 1650, and in 1906, the first US staffing agency was set up in response to the San Francisco earthquake. In the US, the earliest legislation regarding staffing was passed in 1933. Staffing agencies grew in the US and the UK during the second world war when many from the regular workforce left to fight. The post-war consumer boom also boosted flexi staffing. In the 1960s and 1970s, flexi staffing expanded to include white-collar jobs. The Contract Labour Act was passed in India in 1970, but the white-collar staffing boom began in the late 90s.

Flexi staffing: The present

According to the Indian Staffing Federation (ISF) report for 2022, the flexi staffing headcount was 4.74 million in 2022, and the year-on-year growth was 21.9%. The report states that the general staffing industry was driven by demands from various sectors, including FMCG, e-commerce, and banking, and grew by 21%. The IT staffing industry grew by 30.7%, with demand coming in mainly from digital adoption. Around 12% of employees in the IT and ITES sector are flexi staff. A few of the most sought-after skills for IT flexi staff are dev ops, UX design, big data specialisation, and cloud architecture. Flexi staffing solutions are going digital to keep pace with the growth in demand. Automation, AI-enabled analytics and insights, intelligent video pre-screening, and smart invigilation of assessments are some of the features of the digital solutions that find, engage, and match flexi-candidates with the requirements. Staffing agencies connect with potentially skilled talent and build resource databases to develop virtual benches. This strategy allows them to source regionally, nationally, and across levels and domains. Staffing organisations now offer a comprehensive set of services, including assessment, background checking, hiring, onboarding, and rebadging to meet the goals of quick fulfilment and absorption of talent. What are the benefits of flexi staffing that make it so prevalent across industries?

Benefits of flexi staffing for organisations

Cost advantage:  Hiring temporary workers instead of permanent employees allows organisations to switch fixed costs to variable costs. Thereby minimising cost, as they have only the necessary number of employees on their roster and minimal bench. They save on hiring and training costs and reduced overtime for permanent employees.

Faster deployment: Staffing vendors have access to a vast candidate pool with varied skill sets, the latest tools for recruitment functions, and a larger team dedicated to talent hiring. It allows them to fulfil staffing requirements swiftly, efficiently, and effectively.

Flexibility: Flexi staffing permits organisations to increase or decrease employee strength corresponding to business requirements. It allows firms to be dynamic and bold in their business choices. Trying out an experimental product or service is less fraught with risk as it's easier to wrap up the project if it fails to deliver.

Competitive edge: A nimble team with the right skills is more effective than a cumbersome one. Especially in the tech industry, adding numbers does not necessarily mean an earlier resolution or project end-date. Hiring contingent workers who fit the project requirements is more likely to let the organisation be one-up on its competitors.

Specialist expertise: Some product development or project might require a specialist in a niche area on the team. Such experts usually are expensive resources. Moreover, their skill might not prove helpful for other ongoing projects or the ones in the pipeline. Additionally, these specialists would customarily be highly reluctant to switch or change to another field of expertise. A temporary hire is the best fit in such scenarios.

Complex projects: There are long-running projects with many highs and ebbs in the resource count according to the stage of the project. For example, the life cycle could consist of a small initial design team, a medium-sized development team, an extensive test team, and a small review team before the next iteration. Such projects are best done with a core team of permanent employees and an additional contingent unit that grows and shrinks as required.

Reduced administrative effort: Hiring a permanent employee entails more scrutiny and screening to ensure a culture fit, growth potential, and leadership skills than recruiting temporary workers. So, contract worker hiring is the way to go when a ramp-up is needed for a particular duration.

Reduced employee attrition: Employee burnout and stagnation are significant causes of attrition, especially for high-performing talent. Burnout can be avoided by bringing in temporary workers to ease the workload. An employee whose growth has stagnated can take on a change in role, while a contingent worker assumes the employee's previous responsibility. Economic downturns are a time of layoffs, and employees might quit if they get a more secure offer. Organisations can manage staff reductions by letting go of contingent workers and reassuring permanent employees about their job security.

On-the-job assessment: A temporary position can be offered to promising candidates to evaluate their performance on the job. This step ensures that only suitable candidates become permanent employees. It reduces attrition because the candidates get hands-on experience and can decide if the job interests them and whether they fit the organisation.

The temporary worker

Why do people choose to be temporary workers? Work-life balance is a huge incentive, especially for women and older workers. It allows them to cater to other commitments like parenting and caregiving. For some, it is the possibility of an alternative lifestyle that will enable them to travel, take time out for their passions, take breaks, or pursue careers in more than one area. Some individuals start their careers as contingent workers to gain a variety of experiences within a relatively short period by working in multiple organisations, and on different kinds of projects. Straight out of college, freshers opt for temporary work as a testing ground to discover their long-term interests or to check whether the organisation is a cultural fit for them.

Flexi staffing: The Future

Let's look at the factors that could influence flexi-staffing in the future. With improved communication technologies like 5G and advancements in IoT, more jobs will be location-independent, facilitating remote work, and this will, in turn, boost work-life balance and encourage skilled workers on breaks to explore going back to work, at least for specific gigs or part-time. Companies and contingent workers will connect more efficiently as more businesses go digital and online digital platforms evolve. The number of women in STEM courses in India has been steadily increasing, with a rise of 53,388 from 2018 to 2020, and it is expected to continue doing so. This increase will provide a more extensive and diverse talent pool and reduce the demand and supply gap for the IT and ITES sectors where flexi staffing is rising. Improved gender parity in STEM and other educational fields will break gender stereotypes, and hiring will be more inclusive.

The huge gap in gender equality in household chores is another factor that holds back women from the workforce. As more women become financially independent, cultural norms are slowly changing in India, and the younger generation is more progressive in their beliefs. As AI and IoT-enabled intelligent home appliances, which are better automated, are developed and become the norm, a more equitable distribution of household responsibilities can be expected. Lesser women will quit, and the representation of women at all levels, including middle and senior management, will rise. Flexi staffing will see a surge in women applicants. Many nations are facing an impending aging population and will see a shrinking labour force. Flexi staffing could help organisations solve the labour supply issue by providing flexible and part-time options to retired workers who could remain part of the working population. Flexi staffing policies will have to be inclusive of older workers and have comprehensive back-to-work skill upgradation programs in place. We expect the staffing industry to continue on its path of stable growth. The Indian flexi staffing industry was 3% of the organised sector in 2012, and this figure is expected to be 10% by 2025.

Careernet is a leader in the talent solutions space, with clients spanning from start-ups to Fortune 500 companies. Our comprehensive professional staffing solution offers end-to-end services from talent sourcing to payroll processing and compliance management. We would like to partner with you in your growth with our leading-edge technology solutions, critical capabilities, and in-depth experience.

References:

• https://www.nesc.com/staffing/
• https://www.indianstaffingfederation.org/wp-content/uploads/2022/09/Indian-Staffing-Federation-Staffing-Employment-Trends-Annual-Report-2022.pdf
• https://www.indianstaffingfederation.org/wp-content/uploads/2023/04/Indian-Staffing-Federation-Staffing-Employment-Trends-Report-Q3-22-23_compressed-1.pdf
• https://www.indianstaffingfederation.org/wp-content/uploads/2015/05/Flexi-Staffing-in-Govt.-Public-Sector.pdf
• http://www.indianstaffingfederation.org/wp-content/uploads/2019/07/ISF-Report-2019-Impact-of-reforms-on-Job-Formalisation.pdf
• https://thedocs.worldbank.org/en/doc/6cc843232d05fb4b153e56e5eaf2eb0a-0050022022/original/Contract-Labor-and-Firm.pdf
• https://www.indianstaffingfederation.org/wp-content/uploads/2015/05/ISF-Report-Turning-available-Work-into-Jobs-2012.pdf
• https://www.livemint.com/news/india/it-firms-recruit-more-flexi-staff-forprojects-11615833528259.html
• https://www.thequint.com/opinion/over-40-of-indian-stem-graduates-are-women-but-what-about-jobs#read-more