This is the new hiring trend in Indian IT industry
Quess Corp, one of India’s biggest staffing companies, says IT services companies have hired more than 1,000 people every month through this route in the past three months, compared to just about half that number a year ago. “We have seen 60-70% growth this year. We have been in the business for more than 15 years and we have not seen demand like this,” said Sanju Ballurkar, CEO for Quess Corp’s IT contract staffing division, Magna Infotech.
Rituparna Chakraborty, executive vice -president at Teamlease, another major staffing company, said the last time a spike of this order for flexi-staffing happened was in 2007-08, at the height of the global financial crisis.
IT services firms are going through a massive transformation as their traditional services become automated. IT services companies are going through a massive transformation as their traditional services become automated, and clients look to a host of new technologies – including cloud, analytics, mobile, machine learning, artificial intelligence, internet-of-things, blockchain. This is creating enormous uncertainty for them as they attempt to transition to the new requirements. Companies don’t want to be stuck long term with employees whose skills could become obsolete in a couple of years.
IT staffing recruitment is now based increasingly on project durations. “Globally, staffing is moving towards contract staffing as the project flow has reduced and project durations have shrunk,” said Vidur Gupta, co-founder of HR services company Spectrum Talent Management.
Ballurkar echoed it. “We have seen average project durations come down from 15 months to almost 8-9 months in the last two years,” he says.
Chakraborty said the bench models of IT companies -under which full-time employees are kept on standby in the expectation that a project will come -are difficult to sustain. “With flexi staffing, you can quickly get the desired candidate and deploy them,” she said. The staffing companies maintain a large database of potential hires, and when a requirement arises, they bring them on their rolls, deploy them on client sites, and manage the payroll and other matters related to the hire.
Paul Dupuis, chief executive officer (CEO) of HR consulting firm Randstad India, said organisations are fundamentally opting for contract staffing models, because they offer them business flexibility and help maintain their competitive advantage. “The number of IT contract employees has increased by around 10% on a year-on-year basis.The retention of professionals with relevant and niche skills, and the reassignment of those with vanilla IT and support skills as contract employees is a trend that we are witnessing. Companies also tend to opt for ‘just-in-time’ IT staffing models for smaller projects with their new clientele,” said Dupuis.
Many employees are voluntarily signing up as freelancers since it usually means a jump in salary. “A contractual employee would be getting 25-30% more than a person under permanent payrolls. The pay is higher to attract better candidates. Since it is for a short duration of time, not everyone is willing to take up such work,” said Kris Lakshmikant, MD of executive search firm The Head Hunters India. Freelancers who do not come through a staffing company and who work directly with global companies do not also have to directly pay taxes. They can find ways to reduce the tax incidence, which too becomes an attraction.
Sandeep Mathur, the former MD of Oracle India, said superstar performers/coders are willing to be part of this “gig-economy” to work on short projects, because they can command a much higher price in a free market than being tied down to a corporate salary.
Ballurkar predicts that contract staffing will increase significantly within firms.He expects small IT firms (less than 10,000 employees) will have north of 20% of their employees under contract staffing in a couple of years. “For companies with more than 10,000 people, this will grow to between 10-20% from 2-3% now. Currently, this figure is 5% for companies in Europe and the US. India will surpass them,” he said.
Not everyone is as optimistic. Former Infosys board member and HR head Mohandas Pai said a large part of the good mid-level talent in India would still be uncomfortable to work on contracts.
“Hence there is a limit to how much contract staffing will grow,” he said.