Temping - Redefining the Indian Job Market

Temping - Redefining the Indian Job Market

By

N.R. Aravamudhan
Senior Faculty
Suverna International Institute of Management Studies
Ooty

Are you looking to learn new skills in the varied sphere of Business organization? Would you like to have a flexible work schedule? Are you keen on earning a decent salary? The answer to all these questions, a few decades ago would you have evoked a blatantly cynical response ranging from "Honey! Stop kidding" to "Are you for real?" to "Gosh! This can't be true". But not anymore. Temping, packing in such attributes as multi-tasking, flexible schedule and "Jaw-dropping" salary levels is a reality in India today. Though temping has its roots in U.S.A. and later spread its tentacles to Netherlands and Spain .it has emerged as the biggest HR phenomenon in India in recent past. Widely accepted as a common norm in the west, temping today has created a seductive "buzz" amongst the HR fraternity in India. Though MNC's in India were the first one to join the temping bandwagon, domestic companies began to understand the temp(t)ing advantages and its impact on their cost structure. Increasingly, more companies in India are getting quite gung-ho about hiring temporary workers and reap the dividends of cost advantage it offers.

As Indian companies move inexorably towards a globalized business environment, the employees will have to work in three major time zones – namely Europe, U.S. and Asia. This development has prompted the Indian companies to hire temporary workers. The growing clamor for the temporary workers is driven by the companies looking for workforce flexibility, faced as they are with the daunting task of managing the constantly churning markets, demanding customers and shrinking product life cycle. Another reason as to why the temping is gaining currency is the changing attitude of the employees entering the job market today. The attitude is driven by the rewarding career coupled with an exciting avenue to learn multiple skills to remain employable in the competitive job terrain. This in turn is causing a tectonic shift in the work place, where the old notion of "job-for-life" is being turned on its head. Lifelong learning, multi-tasking and flexible schedule have become the common refrain.

What is temping?

Temping is nothing but injecting liquidity into the resident job market. To put it succinctly, temping is nothing but hiring workers for a specified duration or on a project – basis, rather than recruiting them on a permanent basis. A temp is a temporary worker who works with a client company, but is on the pay roll of a third party staffing company. Temping is a tri-party agreement, between the client company, the third party vendor and the employee (also known as associate or temp). The temping basically operates on 2 revenue models. The temping agency mainly receive a percentage of salary accounting for 10-20% in addition to the remuneration paid to the employee or get a fixed fee per month for every employee placed. The temp workers work in the facility of the client companies, but receive salary and benefits from the temp agencies.

Size of the temporary workfORCE in India

As per the estimates of consulting firm Deloitte &Touché, Global temping staff business is pegged at $140bn. Though the figures back home is nothing to write home about, things are poised for a major change. According to an expert study, the slice of Indian temping staff market is estimated to be $111 million. India is supposed to have around 44 crore jobs. The organized labor accounts for less than 7% of the total job. Of these the opportunity for temping staff is estimated to be around 6-8 million Jobs over a period of time. This figures just give an insight in to the size and potential of the nascent market.

What is tempting the Indian Companies to temp?

As Indian Companies get increasingly connected with global Economy, they are coming under immense pressure to push the cost down vigorously and improve their productivity and operational efficiency. Buffeted by the competitive pressure, companies are taking recourse to the temping phenomenon.

Firstly, companies can hire and fire temps according to the ebb and the flow of their business. The companies can ramp up their head count in the wake of influx of more projects and peak season- requirements. It makes eminent economic sense for the companies to hand-hold the temping agencies to provide it with the requisite number of temps. For instance, a company hawking refrigerator or Air-conditioner may have to upsize the employee count to meet the spike in demand for the product in the summer season.

When a company wants to implement ERP solution, it needs people with specific domain expertise in ERP. If such skills are not available in the company, hiring a temp with the requisite skill for a short duration will help matters. A product development company, keen on introducing a new product in the embedded space, may commission a pilot project. Since the outcome of the project is highly uncertain, the company may take the temping route to hire the additional employees needed. Secondly, companies are increasingly training their attention on their core strength and are out sourcing their non-core functions to the out sourced staff. This gives the company enough leeway to stick to their core competency, without bothering about the "nuts and bolts" of managing the business Thirdly, as customers are getting more demanding and restive, Companies are under Pressure to offer low-cost, high-Quality products, Manufacturing and R&d companies are turning to temp staff agencies to provide temporary project staff teams. These project team has the mandate to innovate and develop the product that are in sync with the customer's need and bring out them successfully in the market.

Fourthly, Temping allow the companies to hire people who are already skilled and experienced. This relieves the temping company of training burden and lessens the attendant cost. So Bharati telecom, which has hired tens of thousands of temp workers, can concentrate on building up its new mobility solutions rather than getting exercised about hiring sales personnel. Fifthly Temping allows more elbow room for the companies to scale up their employee count and still keep its cost structure on a light leash . According to a recent study, cost per hire of permanent employees works out to Rs8000-Rs12000 which is quite higher than having the temp workers. So temping gives the company a decisive cost advantage Companies treat temping as a testing tool to source permanent employees. Many companies maintain a good mix of temp and perm and converts some of the good temporary employees into permanent one.

In u.s.a, the conversion rate is 4 to 5% where as in India, the conversion rate is much higher. Holding a permanent job is something germane to Indian psyche and therefore employees treat temping as a path to permanency. At the end of it all, companies take the tempting route to infuse a greater degree of discipline and prudence in managing their finance.

AREAS OF TEMPING

Though temping in India is set to witness an explosive growth, the rate of its adoption in the initial years was tad bit languorous. Much of the temping happened in new age companies like Information Technology and Information Technology enabled services space. IT companies primarily operate on man-month model, and it needs bench strength to provide replacements within a day or two. Temping agencies are quite willing to meet this requirement of IT companies Bpo companies are also latching on to the temping. Though MnC'S have used temp workers for Indian back-end operations temps were never hired by the Bpo Companies. The third party contractors stipulate a condition that the temp workers should not be used in Indian Bpo companies in view of ensuring data security. Bpo companies, grappling with high attrition level has now taken to temping in a big way. Many Bpo companies have managed to convince their third party contractors to allow for using the services of temp workers. According to recent estimate, Temp workers account for 2-3% in the core Bpo space and may grow to 5% in the current year.

Temping opportunities abound across various industries and job functions.

Temping jobs are increasing in human capital- intensive business like banking, financial services, Insurances, FMCG, Retail and fast moving consumer durables. Much of temping in India is happening at the low end of the skill spectrum such as data operations, accounts, sales, back-end operations, administration and marketing. Temping trend is slowly catching on in the middle level also.

Who constitute the growing TRIBE OF temp workers

Though the temping concept took some time to get off the block in India, it is gaining acceptance with retired professionals, housewives, freshers, students and freelancers. People looking for short-term options, experienced people looking for specific Experience, top-notch professionals looking for interim position are all getting hitched on to the temping band wagon. But the biggest beneficiary of this temping phenomenon, have been the ''fresh-as-mint'' graduates, waiting to burst in to the job market. Many fresher try the temp job to check out the job-personality fit and chalk out their career path. Another notable trend is that the people in their late 40's are also plunging head long in to the temping market. These are the professionals who are past their professional prime or those who cannot fit snugly in to the corporate groove any more. House wives are also plumping for a part-time job in large retail outlets to man the cash counters during the peak rush hours in the evening.

Issues strait-Jacketing temping MARKET:

Though temping has the potential to leap frog into the next level, India's archaic labor law is stultifying its growth. Experts cite that certain provisions of contract labor regulations act and industrial disputes act are stymieing the momentum temping has generated. Our labor laws have failed to keep pace with growing economy of our country. According to a recent white paper presented in a seminar on "Temping and outsourcing: A strategy to improve the competitiveness of enterprises". India's labor force is growing at 2% per year. By implications, it means the economy will have to generate eight million jobs to plug the unemployment. Such massive numbers are next to impossible to achieve unless the employment elasticity of GDP perks up. Experts in the industry believe that Indian labor laws do not encourage contract labor and certain provision of contract labor regulation act (CLRA) is limiting the immense potential of the temping industry. Team lease services, a Bangalore – based staffing firm, in a report has identified the weak areas and proposed certain measures to help the industry realize its full potential. The report has identified issues such as concept of principal employers, core and perennial work, industry restrictions, high mandatory pay roll deductions and compliance are notable few that merits an immediate attention of the government. Thanks to these issues, bottlenecks such as dual employer relationship with little or no accountability, higher proportion of outsourcing to the unorganized sector; the dubious consulting agreement has emerged. The report has suggested that the staffing firm be recognized as principal employer. The report suggests that the services of temp workers be allowed in all industries and function, besides abolishing all the existing cap on timing and locations.

Temping Advantages

Temping offers advantages to both the employees as well as the company

From the employees' standpoint:

Temp employees can gain hands- on experience in their chosen industry or in different field.
Temp employees can get an inside track about their chosen field instead of hearing or reading about it.
Temps can catch a glimpse of different industry and functions and see for themselves how the industries work and functions performed.
Temp employees get an opportunity to learn new skills on the job.
Temps also receive training in new skill areas.
Since majority of the temping jobs are at the low-end, the temps get an opportunity to learn the job functions from ground up. Temps will have a greater grasp over the rudiments of their job which will be quite critical as they build their career and inch their way in to a permanent position.
Temping offers an opportunity to the employees to explore different areas of a job function without making any long-term commitment.
Temps can earn a decent salary. According to a recent estimate, average salary for the employees in the low ranges is around Rs. 7500 per month. For middle level, it is Rs. 35,000 and at the senior level the salary can ratchet up to as high as 4.5 lacs. In the case of time-bound projects, temp command more salary than the permanent employees. According to another study as quoted by the economic times, the salary increments for temps are moving south wards. Salary increment for temps in the manufacturing sector has gone up from 14% in 2005 to 17% in 2006 .As against a hike of 20% in salary. In the IT and ITES sector for permanent employees, the hike for temps hovered at 17% in the corresponding period. Besides temps remuneration is linked to the number of hour's temp work. If they work for more hours, they can earn quite an amount.
When temp work for top-notch, blue-chip companies, they have the advantage of working for a better brand which gets reflected on their CV's.

From the company standpoint

Temping arrangement helps company to acquire the decisive cost edge.
Temping allows for flexibility of employment. According to the study conducted by a consulting firm Delloitte and Touche, 6% of the employers use temps to reduce wage costs, 63% of employer hire them to match the seasonal spike in demand, 59% to cover for holiday/sick leave, 39% to cover for maternity leave, 21% hire temporary staff for specialized skills and 20% hire temp workers on a trial basis so that they can be absorbed in to permanent positions.
Ease of recruitment and replacement: companies hire temps in the wake of surge in demand for the products and service. companies can also cut back the employees when it goes through a lean patch.
Company need not bother about issues such as motivation, career planning, and performance evaluation to temp employers. They are the headache best left to the staffing agencies.

Disadvantages of temp jobs

From the employee's standpoint

Looming threat of job insecurity
No benefits and holiday
Temps may witness of lot of gaps in their employment
Temps will have to do the routine, mundane and monotonous activities.
Temps may expect the marching orders without any notice at all.
Some companies tend to treat temps as a second class citizen. The exploitation of temps in the client companies are quite common.
What was meant to be job to gain experience can become a full-time career if temps do not strive hard to become a permanent employee. Employees tend to become blasé and lazy about job search.

From the company stand point

Companies will find it tough to maintain their culture in the event of large proportion of temps working with the permanent employees. Temps do not feel committed to the culture of the client company.
Temps may not inject same level of motivations, sincerity and energy as permanent employees do.
Company will have to depend on the staffing agency to provide the temps it needs. Staffing agency may provide the client company with temps who may not fit the needs of the client. Consequently, the client company are saddled with more work and no good worker.

Pre-requisites to make temping a tempting option

Motivation is at the core of bringing the best out of employees. Companies are expending their resources and energies to chalk out strategies to motivate employees. This motivation is just confined to permanent employees. Temps receive scant attention and motivation from the employers. Employees do not feel the cost of ownership. Companies should look at ways and means to motivate the temps also.
Any progressive company should not discriminate between temp and permanent employees. In many companies the office furniture are treated with more respect than temps. Though the temp jobs do not carry the stigma any more, the isolation if temp in the company is more pronounced. The temps are still perceived to be the rank outsiders by the perms. Employee – friendly companies that uphold human values and dignity should obliterate all signs of discrimination against temps.
Channels of communication should be opened between employers and temp workers about standards of performance, actual performance and feed back about the scope for improvement.
Employers should device appropriate reward and recognition systems for temps as well.
Employers do not provide any training to temp workers as they do to the permanent workers. In case if they notice that the hired temp lacks the skill sets they are expecting, they may ask for quick replacement from the staffing agencies. By and large, the training is provided by the staff agencies. Temp agencies, keen on building up a viable temping model should commit its resources, and energy to train the temp workers. Apart from service, it is the training which will be the key differentiator in an increasingly crowded temp market. Manpower Inc., a leading global player in temp business has a learning centre that offers 4000 courses on-line to its temporary staff. Once the temp complete their courses successfully, they receive certification from the agency. This certificates lend weight to the temp's resume.
Employers should devise schemes for the temps that are in line with that of perms.

Promising Road ahead for temping market

Contrary to the popular belief, Temping is not a new management fad and is here to stay. Temping may witness an exponential growth in India. Temping is purely a volume play and not a value play. Temp agencies can add value to their clients by morphing in to a comprehensive end-to-end activity management than being just a employee leasing company. Quality of service delivery, geographical reach, technological platforms, providing employees on tap, effective training and superior operational delivery system are some of the factor that will help the temping agencies to make deeper in roads into the Indian temping market. Temping agencies should also get familiar with the verticals and specializations emerging today.

Much depends on the temping agencies ability to customize the temp model to the requirements of the clients. This alone is going to help the markets winnow the good players from the bad.

N.R. Aravamudhan
Senior Faculty
Suverna International Institute of Management Studies
Ooty

Source: E-mail April 23, 2007