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CHAPTER IV

ROLE OF TEMPORARY STAFFING AGENCIES IN LABOUR MARKET

INTERMEDIATION

4.1 Introduction

This chapter explores the main services provided by the temporary staffing agencies.

It examines the key industry verticals that are availing services of agencies, to deploy

temp staff, on a large scale. The study focuses on the retail sector in Mumbai hence

the profile, average compensation, range of jobs, access to facilities, of the temps

hired through agencies, is explored with reference to the selected area. The

Agency/Temp relationship is delved into with reference to the facilities provided to

the temp staff. It also examines motivations for the client organizations to hire temp

staff through agencies as perceived by the agencies.

Challenges faced by the agencies, which can be a major impediment to the growth of

the staffing industry, like providing training, attracting right talent, handling issues

and claims of employee benefits, amongst others , are investigated. Strategies used by

the agencies to improve temp performance and motivation like competitive pay,

training, offering opportunities to become permanent staff, and others have been

analyzed.

The analysis of the role of staffing agencies reveals a very active participation in the

selected area. The agencies confirmed that their services are availed by corporates

transcending industry, size, location and skill segments. It was revealed that by them

that high costs of training and sudden spurts of client demand have been encouraging

players in these sectors to utilize the pool of temporary staff made available to them

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by various agencies. Additionally agencies confirmed that there is there a high

demand for temporary staff from the retail sector.

Agencies cited an extensive array of different categories of people who choose to

temp. They reported recruiting fresher’s in large numbers on their rolls who temp to

gain work experience and professionals in various fields who have proven abilities in

their respective fields.

Reasons for client organizations to use temp staff were understood in the interaction

with the agencies. Cost of training, attracting right talent, handling issues and claims

of employee benefits emerge are major challenges for the agencies. Greater emphasis

on strategies to improved temp engagement by the agencies reveals that the agency

understood the direct correlation between employee satisfaction and employee

productivity.

4.2 Analysis of the Services offered by staffing agencies

Staffing agencies confirmed that they assumed responsibility of recruitment, statutory

employee benefits training and development, replacement of the temp staff for the

client company for which they charged a fee to the client organizations.

The data reveals that the staffing agencies were offering a wide range of services,

often combining services as per the request of the client. In the overall sample, all the

agencies confirmed providing the following services: Temporary Staffing, Permanent

Recruitments, Payroll Process Outsourcing, Regulatory Compliances Services,

Assessment Services and Corporate Training services.

In case of temporary staffing it was reported by all agencies that they assisted

corporate clients in their staffing requirements by providing contractual or temporary

manpower. They confirmed to work with clients in hiring or identification of temp

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resources and taking on the selected resources on their payroll for providing services

to the client. Alternatively they also confirmed that they take on their payroll,

resources pre-identified by clients or existing through some other arrangement. They

take complete responsibility for all HR Administrative activities, statutory employee

benefits and compliances for the outsourced resources.

With reference to permanent staffing, all the agencies confirmed that they were

involved in permanent recruitments. They affirmed that their service offerings in the

permanent hiring space include : Executive Search: Catering to senior level / niche

positions across industry verticals encompassing a holistic process right through to

closure, Contingent Recruitments: Catering ongoing requirements through profiles

sourced via multi-pronged approaches like in-house databases, support from channel

partners, field sourcing, market mapping and referrals and scheduled walk-in drives.

Advertised Selection: Use of creative designs and informative advertisements to

attract talent, and provide clients with an End-to-End Service with comprehensive

feedback, analysis and modified MIS reports., Turnkey Solutions: Addressing large-

scale recruitment demand through a time and budget bound approach, Recruitment

Process Outsourcing (RPOs): Owning and managing the entire recruitment process

with 100% hiring fulfillment.

Payroll Processing is a service which all the agencies confirmed that they provide.

Agencies said that they had a well established and robust payroll system in place that

is combinations of the best of software tools, expert know how, IT infrastructure and a

strong payroll team. In response to articulated customer needs and as a logical

extension of their services portfolio, they confirmed that they had introduced Payroll

Process Outsourcing services as a standalone offering a few years ago. They said that

their platform can handle the payroll of over thousands of employees and is designed

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for scale, speed and accuracy and confidentially, accommodating client specific

needs. Table 4.2.1 revealed the following key deliverables in payroll outsourcing

services:

TABLE 4.2.1: KEY DELIVERABLES IN PAYROLL OUTSOURCING

SERVICES

One Time Activities

Salary and benefits structuring

Data migration

Setting up rules and employee masters

Dry and parallel runs

Recurring Activities

Payroll Processing

Pay slips

Statutory reports and submissions

Client and employee query management

Annual Activities

IT computation

Receipt and verification of declaration and proofs

Form 16 and Form 25

Reports and MIS

Pay registers

Leave reports

Bank advice reports

IT reports etc.

Source: Primary survey and media articles

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Staffing agencies confirmed that they were involved in training of the temp staff. It

was noted that the agencies had a separate training wing aiming at skill training and

development in the corporate arena. A majority of them confirmed that they were

using a mix of Satellite Enabled Training, Traditional class room training, Remote

labs and E-Learning with simulations & projects, as the training methodology.

Agencies confirmed that they also customize the training, both in terms of content as

well as delivery methodology depending upon the unique requirements of each

corporate. Table 4.2.2 highlights the different training services offered by staffing

agencies.

TABLE 4.2.2: TRAINING SERVICES OFFERED BY AGENCIES

Services Offered

Product Training

Fresher Induction Programs

Skill Upgrade Training programs

Certification related training

programs

Soft Skills

Training Infrastructure support

Assessments

Content development

Source: Primary survey and media articles

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Agencies had worked out a generic duration for the courses offered and the same

could be modified based on their clientele requirements. They provide tailor made

packages of the latest cutting edge technologies so that the employees could be

upgraded in the shortest possible span of time. It was also mentioned by the agencies

that there were clients who conveyed to the agencies that training would be provided

by them.

It was reported by all agencies that assessment services was a key element of their

suite of productivity enhancement solutions. They confirmed that to assess skills,

knowledge and aptitude, their range of services includes: Competency Framework

Development & Ideal Candidate Profiles, Pre-Hire Assessments, Employee

Competency Benchmarking, Custom, Assessment Solutions, Training Effectiveness

Assessments, Face-to-Face / Telephonic screening, amongst others. They further

confirmed that their suite of Assessments includes: Employability

Assessment, Behavioural / Psychometric Personality Pattern Assessment, IT

Aptitude Test, Trade Knowledge Tests, IT Skills Assessment suite comprising Skill,

Functional / Domain specific skills Assessments and Customized Assessments.

All the agencies revealed that they provided assessment services which could be

delivered through multiple mechanisms. It was noted that web-based online

assessments as well as onsite assessments, through a network of partner centers and

their offices across PAN India, were the prominent mechanisms. They also mentioned

that assessment services can be administered not only in English but many Indian

languages.

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62.5% of the clients confirmed that they offered a comprehensive solution for labour

law compliance needs of their clients. They confirmed having developed a strong

infrastructure, expertise and robust processes designed to handle large scale and

diverse compliance requirements of their clients across locations. All those who

provided this service confirmed that they had a dedicated team of professionals with

significant experience and relevant academic and practical know how, operating from

different locations across the country to provide this service.

The suite of services offered under this head provided by agencies in the study

includes:

TABLE 4.2.3: REGULATORY COMPLIANCES SERVICES

Consulting

Services

An Advisory Service.

Comprehensive consultation on labour law compliance

requirements.

Covers Central, State, Industry specific compliances.

Auditing

Services

Audit of client labour law compliances as per defined scope.

Audit of vendor(s) compliances if required.

Engagement cycle is based on client requirement: one time/

periodic.

Maintenance

Services

Assistance in complete end to end record including records

upkeep and maintenance.

SLA based support and assistance on issues faced.

Engagement model can be modular or comprehensive depending

on client need.

Liason Services

Facilitating one-time activities like registrations, renewal,

approvals or any other related one time activity under labour

laws.

SLA based support.

Source:http://www.teamlease.com/index.php?module=content&pid=regulartory_compliances_

services

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They confirmed to providing all the required assistance with regards to statutory and

labour law compliance requirements under one umbrella.

4.3 Key industry verticals having active temporary staffing practices

Table 4.3 gives information on the key industry verticals choosing to employ temp

staff from agencies in large numbers, as perceived by the agencies.

TABLE 4.3: DISTRIBUTION OF RESPONDENTS ON THE BASIS OF THE

KEY INDUSTRY VERTICALS HAVING ACTIVE TEMPORARY STAFFING

PRACTICE

Industry Total ( % of total no.=8)

Retail 07(87.5)

Automobile & Allied Industries 01(12.5)

Consumer Durables 05(62.5)

Power & Energy 01(12.5)

FMCG 08(100)

Manufacturing & Allied Industries 02(25)

BFSI 05(62.5)

Telecommunication 07(87.5)

Hospitality 06(75)

Healthcare & Allied Industries 03(37.5)

Information Technology & ITeS 05(62.5)

Agriculture & Agrochemicals 01(12.5)

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The data reveals that in terms of active temporary staffing FMCG, retail and

telecommunication sector rank first in the list provided in table 4.3. From table 4.3 it

can be observed that companies across sectors such as FMCG, Retail,

Telecommunication, Hospitality, Consumer Durables, BFSI, IT & IteS are

increasingly shifting to the flexi staffing model. Staffing agencies opined that opting

for flexi staffing gives companies a good safety cushion against high attrition, as all of

these industries have high numbers in this regard. Flexi work facilitates structural

change by enabling companies to ramp up and ramp down talent according to the

need. In order to control fixed costs, firms have preferred opting for temporary staff to

bring in efficiency in their operations.

In the overall sample all the agencies confirmed that their services were availed by

corporates transcending industry, size, location and skill segments. Flexi jobs are

increasing in human capital intensive businesses like FMCG. Agencies confirmed that

the FMCG industry in India today is probably the fastest moving industry with temp

hiring on a large scale. The need to reduce costs, handle attrition issues and with

rising customer expectations and complex supply chain requirements, the need to hire

innovative people has given fillip to flexi staffing in this industry.

A majority of the agencies interviewed opined that the size of India's Retail sector,

one of the major sources of demand for flexi staff in India, is expected to grow at 10-

12% per annum according to ISF ( apex body for staffing agencies) which is a

positive indication for industry growth. Given this positive future outlook, the sector

is expected to witness a strong demand for flexi staff. With the latest trend of

weekend shopping and the opening up of FDI the retail sector has got a major boost

and this has also created the need for more staff especially in weekends and on

festivals. Agencies pointed out that earlier retailer were directly hiring temps, but now

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are using the services of staffing services firms. Most flexi jobs in retail are at the

lower end of the skill spectrum, such as data operations, accounts, sales, back-end

operations, administration and marketing. With regards to telecommunication industry

agencies pointed out that they too had a high preference to hire through the flexi

mode. It was pointed that there was unprecedented opportunity for telecom service

operators, infrastructure vendors, manufacturers and associated services companies in

India which led to growth in the industry. These developments have led to an

increasing need for staff and to remain competitive the need to cut down costs. This

has boosted demand for flexi staff from the agencies.

Agencies confirmed that even the Hospitality industry is increasingly shifting to the

temporary staffing model. Companies in hospitality industry generally hire temporary

staff since demand varies with economic activity, In the case of a downturn, when

demand for their products is likely to be slow, they avoid fixed costs and prefer to use

flexi staff.

A high demand for temp staff was reported from the BFSI & Consumer Durables.

Agencies confirmed that there is an overall improvement in the profitability situation

in the recent years and also broad convergence of profitability across various bank

groups which has created a lot of potential in the BFSI sector. The insurance sector in

India has come a full circle from being an open competitive market to nationalize and

then back to a liberalized market again. To gain flexibility in employment and remain

competitive, flexi staffing is on a rise.

Firms mainly from the consumer durables domain are seeking out temps confirmed

the agencies. According to agencies temping allows companies to save as much as

15% of their manpower costs since they do not have to bear these: employees’

pension, insurance, health-care and provident fund costs as they are not on their

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payrolls. Many consumer durables firms see temps as a sort of hedging strategy to

safeguard themselves against taking in additional manpower costs.

According to the agencies the Indian IT and ITeS industry is also using temp staff on

a large scale. The industry is expected to witness a high level of flexi hiring in the

next few years, with the penetration of temporary workforce in the segment being

expected to increase from 10% to ~20% ( ISF, 2012). Although the industry has been

facing challenging times amid the global economic slowdown, there has been

buoyancy in flexi hiring among IT companies in India. IT firms are swiftly adopting

the practice of hiring flexi staff in order to beat margin pressures, maintain lean

benches and also facilitate just-in-time hiring in a highly volatile market. The firms

are increasing their flexi staff count in non-core activities and services (where the

revenue flow is not recurring) to focus more on core activities and cut down on costs

to withstand competition from other emerging markets and become more competitive.

Considering that deploying flexi staff increases flexibility, enabling allocation of staff

as per changing requirements and cuts down costs, staffing agencies confirmed that

they expected that the companies who were hiring temp staff at a slow pace :

Automobile & Allied Industries, Power & Energy , Manufacturing & Allied

Industries , Agriculture & Agrochemicals , Healthcare & Allied Industries , would

speed up in due course of time.

Agencies were of the view that in the next few years flexi staffing will be more

prevalent in sectors not touched by it. They shared that temping was becoming

popular with firms engaged in energy, metallurgy and infrastructure sectors. Energy,

metallurgy and infrastructure sector companies shut down their plants for

maintenance for around two to four weeks. Hence they prefer to use temps rather than

keeping specialists in maintenance on their rolls.

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Majority of the agencies interviewed confirmed high demand from the retail sector. It

was understood from the agencies that opening up of FDI in the retail sector had

created tremendous potential in the retail sector. Agencies pointed out that earlier

retailer were directly hiring temps, but now are using the services of staffing services

firms to be able to handle rush on weekends and during festivals.

4.4 Work & Worker Profile

4.4.1 Composition of temp staff

This section is based on the response of the staffing agencies who were interviewed as

a means of back grounding the industry. Agencies reported that the range of people

who temp vary. Agencies cited an extensive array of different categories of people

who choose to temp in Table 4.4.1

TABLE 4.4.1: DISTRIBUTION OF RESPONDENTS ON THE BASIS OF

COMPOSITION OF TEMP STAFF

Composition of temp staff

Total ( % of total

no.=8)

Fresher’s 08 (100)

Skilled people 07 (87.5)

College students 06 (75)

Housewives 04 (50)

Retired Professionals 03 (37.5)

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It was reported by all the agencies that fresh graduates/ first-time job seekers account

for the majority of flexi staffing employees. It was confirmed that agencies had

freshers in large numbers on their rolls who temp to gain work experience and trying

to test the waters of the employment market before deciding on a career – launch.

Discussion with the agencies confirmed that the fresher’s hugely benefited as they got

an opportunity to work for major brands on short-term projects and gain experience,

which is difficult to crack otherwise. Staffing agencies confirmed that maximum

workers in the flexi staffing industry fall is largely young. This highlights the

importance of the flexi staffing industry for the section of our youth just out of college

or with minimal work experience. Utilizing the work experience gained while

working in flexi jobs to their advantage, they enhance their skill profile and increase

their chances of being absorbed into the regular workforce.

Agencies reported that they have skilled people on their rolls who want to get specific

experience, or discover new opportunities or want to display their talents to the client

organization, which could pave way for their enduring career. These skilled people

are professionals in different fields having proven abilities.

With professional flexi staffing companies, now a flexi worker gets all the statutory

social security benefits, health insurance and other benefits he/she is entitled to. Apart

from it not being permanent in nature, there are no major drawbacks as such when

compared to a permanent job. The salary gap between flexi and permanent job is also

reducing and is expected to close-in in a couple of years. This could be a strong

reason for the attraction of skilled people to the flexi staffing industry.

College students were in flexi staffing was confirmed by the agencies. It was pointed

that only those who were above the age of 18 years were absorbed. It was also noted

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that there was maximum hiring of temp staff during college vacations. College

students basically wanted to temp during term-time and holidays.

Flexi jobs benefits other job market outsiders like housewives, retired personnel and

others. 50% of the agencies confirmed that housewives, who are basically looking for

part time or short-term assignments and want flexibility at work preferred to temp. It

was revealed by 37.5% agencies that even retired professionals with niche skill sets

were also opting to go flexible as they could work with multiple clients and charge a

premium for their work. For others, flexi staffing is more of a lifestyle choice, where

one can work according to his/her schedules and comforts.

4.4.2 Educational qualification of temp staff

In the overall sample it was seen that agencies confirmed that the temps in the retail

sector had qualification upto graduation.

The data reveals flexi staffing industry in India has high potential to create significant

job opportunities for those with average academic background. Flexi staffing industry

is an important avenue of employment for job seekers with graduate degree in general

streams (Bachelor of Arts, Bachelor of Science, Bachelor of Commerce), or lower

qualifications. The general graduate degree holders and undergraduates have the

largest share followed by post graduates.

The growth of the flexi staffing industry thus can create significant job opportunities

for youth with an average academic background and lacking any specific set of skills,

reducing the number of educated unemployed.

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4.4.3 Type of flexi job in retail

The agencies in the overall sample in their discussion revealed that the temps were

hired in various types of jobs which mostly need low to moderate skills. The

following is the list of flexi jobs in retail offered by temporary staffing agencies who

were interviewed:

Type of flexi job in retail

- Counter-Sales

- Customer Service

- Sales and Marketing

- Merchandising

- Cashiering

- Stocking

- Pricing & Tagging

- Supply Chain & Logistics

Agencies revealed that majority of the temp staff in the retail sector were involved

in low end to moderate skill jobs like counter sales, sales and marketing, customer

service, cashiering stocking and others and very few were with high end profiles like

procurement, supply chain & logistics , merchandising and others. The work profile

spread from low – end mundane jobs to positions of greater responsibility and are

often placed in roles that are critical to business success. There has been a shift in the

way temp staff is being used by contemporary firms. They are no longer used just as

‘fill-in’ labour or as a stop-gap measure related to changes in the business cycle.

White collar roles offered, involve workers with low to moderate skill sets. It was

noted that now temporary staff is now being hired in a wide variety of occupations.

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The work profile spreads from low – end mundane jobs high-end jobs This is a clear

manifestation of the fact that temps are not only hired for unimportant tasks but also

to fill up high skill jobs. Agencies reported that temporary staff is now being hired

even in high end jobs in retail.

4.4.4 Average compensation to temps in retail

The fact that the retail sector in India offers jobs requiring low to moderate skills is

also evident from the response to the query on the flexi staff monthly salary. The

respondents reported that maximum temp staff in retail were earning less than Rs

10000 a month, followed by those who earn in the Rs 10000 to Rs 15000 per month

bracket. There was a smaller percentage who were earning in the Rs 15000 to Rs

25000 bracket and very few who had income above 25000.

Agencies pointed out that for high end jobs salaries offered were higher. Additionally

agencies pointed out that on the basis of experience there were variations in salaries.

It was understood during the course of discussion that temp salaries were catching up

with the permanent ones.

4.5 The Agency/ temp staff relationship

In order to meet the requirements of their client organizations, staffing agencies not

only need access to a reliable supply of temporary staff, they also need to ensure that

their labour force behaves appropriately within their client organizations. This

necessitates maintaining an ongoing relationship with temporary staff and moulding

their expectations and behaviour to conform to client requirements. In order to meet

this need, staffing agencies have been described as using a range of control tactics to

manage their labour force which are described in this section.

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In order to promote a more caring image of staffing agencies, some agencies have

tried to take a more human approach towards their temporary staff. Temp staff

workers generally feel more committed to their agencies than to client organizations,

which can be especially the case when training and benefits are provided by the

agency. How well a temporary worker feels about their agency may influence how

well they engage in commitment to a client organization which in turn could create a

good impression of the agency.

4.5.1 Benefits provided by the staffing agency

In the study it was reported by all the agencies that the temps were eligible for

provident fund, gratuity, medical insurance and leaves. Weekly offs and sick leaves

were given but at the discretion of the client. However, the providing of life insurance

or accident insurance was absent. Considering that Government is pressing for

comparable benefits for regular and contract workers, the staffing industry will need

to give more attention to this aspect.

Agencies pointed out that the time period for which temps were associated with the

agencies also determined their access to social security benefits. It was noted that

because of temp turnover many temps failed to become eligible for the benefits.

Absence of unionization among temp staff was confirmed by all the agencies, that is

temp staff are not members of any trade union or independent staff association.

Agencies were not interested in temp staff not having trade union representation.

According to them there was no necessity of them to unionize as they were getting

benefits due to them.

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All the agencies confirmed that they impart specific job training for which they have a

separate training wing. They pointed out that though they offered training facilities in

case of certain clients there was no demand for training as they preferred to provide

training on their own.

4.5.2 Initiatives for temp engagement

In the overall sample emphasis on strategies to strengthen temp engagement such as

competitive pay, opportunities to become permanent staff, training , executing an

effective communication plan between the employer and the temp on subjects of job

performance, appraisals, feedback have been observed. Greater emphasis on

strategies to improved temp engagement by the agencies reveals that the agency

understood the direct correlation between employee satisfaction and employee

productivity.

Offering opportunities to become permanent staff of the company was recognized by

all the agencies as of one of the most imp initiatives for enhancing engagement, all the

agencies confirmed this. It was reported that one of the most important ways to create

engagement is to offer the temp staff the opportunity to become permanent staff in

that organization. If the permanent staff is selected from the temps, they are likely to

put in the extra efforts and work harder.

Training was also recognized as one very motivating factor for the temp staff by all

the agencies. As the temps are trying to add to their skills and thereby value in the

market while working for the client organization, training programmes could create

sense of engagement.

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Discussion with agencies revealed that executing an effective communication plan

with the temp on subjects of job performance, appraisals, feedback etc. was relevant.

Agencies pointed out that an increase in salary of temp staff or a bonus received on

the basis of a favorable performance appraisal were important performance enhancers.

Feedback on job well done can also enhance temp engagement.

It was further reported that temps were motivated to perform when they received

competitive salaries at industry standards and matching permanent ones. They pointed

out that they were always looking for clients who could offer high salaries to the temp

staff.

4.6 Reasons for client organizations to hire temp staff

All the agencies cited that the main reasons for clients to use flexi staff include:

greater flexibility, speed of availability of temp staff and reduced costs.

Agencies pointed out that in any part of the year they could provide clients with temps

suiting their requirement this was considered one important reason to have preference

for staff through agencies. Supply of well trained and skilled employees reduces the

orientation time of the temps and the time taken to integrate them with the core

workers and with the operations of the company.

The fact that temp staff provides staffing flexibility for clients is a key finding in the

study confirmed by all the agencies. It provides the user organization with a means of

varying their staffing levels by increasing staff numbers during peak periods and

decreasing them during periods of low demand. Furthermore, clients can have access

to workers with specialised skills for specific periods of time without having to

permanently employ them.

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Benefits for clients include saving on recruitment and training expenses, avoiding

potential redundancy payouts and overtime rates, and avoiding labour regulations and

obligations associated with permanent workers . The number of temp staff can be

adjusted to fluctuations during the day, week or month, so one does not have to risk

overstaffing and paying permanent employees for work hours when there is no work

to be done.

Other reasons for using temp staff include the desire to concentrate on core activities.

Temps require minimum supervision while fulltime staff can concentrate on core

activities saving time, money and resources.

All the agencies reported that though there was demand for temp staff from the retail

sector throughout the year but there was a spurt in sales during festivals like Diwali,

Christmas, New Year and Regional festivals. With western culture finding space in

most of the Indian families, more and more people these days flock the retail stores

and shopping malls during Christmas and New Year. Most agencies reported that

festive season in the last quarter of every year sees a spurt in temporary recruitment,

especially in the retail sector. The vacations taken by regular staff for Christmas

and New Year celebrations fuel the requirement for temporary staff. The companies

start recruiting additional staff just before festivals.

4.7 Challenges faced by the agency

Cost of training, attracting right talent, handling issues and claims of employee

benefits emerge are major challenges for the agencies.

All the agencies said that providing training and its cost was a challenge. Time money

and efforts are involved in providing training as today there is a need for training

beyond simple computer-based up-skilling. Temp staff need workshops on

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interviewing skills, information on the latest developments in software, information

about changes to legislation, industry trends and forecasting ‘up and coming skill

demand’ so that temps could train themselves in these areas in order to secure on-

going and/or better paying assignments. Agencies confirmed that they were using a

mix of Satellite Enabled Training, Traditional class room training, remote labs and E-

Learning with simulations & projects, as the training methodology. Also agencies

pointed out that the biggest challenge was to customize the training, both in terms of

content as well as delivery methodology, depending upon the unique requirements of

each corporate.

The agencies reported that challenges are in the form legal issues that arise with

improper employee classification in the agreement, where chances of temps

demanding the rights and privileges of a permanent employee might occur. Huge

expenditure may be needed to settle claims of the employees towards employee

benefits. Additionally it was understood from the agencies that as staffing is a

highly fragmented and a highly competitive industry differentiating oneself by

attracting right quality is a major challenge. It was understood that he demands of the

user industry had gone up in the recent past in terms of quality of personnel therefore

agencies need to have the right skills to suit client requirements.

Additionally agencies pointed out that an appropriate and balanced regulatory

framework is an essential prerequisite for sound development of the industry. The

legal environment pertaining to the staffing industry is cluttered with too many labour

laws having a considerable degree of overlap and ambiguities. They pointed out that

this complex legal environment has created a situation of ‘undue advantage’ for the

unorganized players. Some of the agencies pointed out that the actions of unorganized

players, through non-compliance of labour laws, put them in a far better position

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which actively harms the position of the organized playeres with respect to their

ability to compete on equal and fair terms. It was understood during the course of

discussion that the agencies felt that more competition of this unhealthy kind between

actors in the industry lower the profit margins, which forces them to compete with

lower price rather than with more value added strategies.

Other challenges pointed were of attrition because of which recruitment and training

costs were high. Also because of high temp turnover companies had to continually

recruit to ensure that they had temps on their books who could fulfill the requirements

of the client.

4.8 Conclusion

The analysis of the role of staffing agencies reveals a very active participation in the

selected area. They work with clients in hiring or identification of temp resources and

take on the selected resources on their payroll for providing services to the client.

Alternatively they also take resources pre-identified by clients or existing through

some other arrangement on their payroll. A fee was charged by the agency for the

services provided.

The findings of the study revealed that the key industry verticals such as FMCG,

Retail, Consumer Durables, BFSI, Telecommunications, Hospitality and I.T. were

using temp staff in large numbers. Agencies confirmed that there is a very high

demand for temps from the retail sector which has got a major boost from the opening

up of FDI. Commentators have observed a structural shift in the way temporary

labour is being utilised in contemporary firms (Carre, 1992; Nollen, 1996).

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Agencies cited an extensive array of different categories of people who choose to

temp. They reported recruiting fresher’s in large numbers on their rolls who temp to

gain work experience and professionals in various fields who have proven abilities in

their respective fields. Interaction with the agencies revealed that the work profile

spreads from low – end mundane jobs to high – end jobs. This is a clear manifestation

of the fact that temps are no longer used just as ‘fill-in’ labour or as a stop-gap

measure related to changes in the business cycle. Instead, temporary staff nowadays

fills positions of greater responsibility and are often placed in roles that are critical to

business success (Brogan, 2001).

Agencies confirmed that they assumed responsibility of recruitment, statutory

employee benefits and replacement of the temp staff for the client company. It was

reported that the temps were eligible for provident fund, gratuity, leaves and salaries

offered were matching industry standards. Absence of unionization among temp staff

was highlighted by the agencies. Agencies confirmed that they impart specific job

training for which they have a separate training wing.

Main reasons for client organizations to use temp staff as perceived by agencies are:

meeting unexpected changes and seasonal demands, reducing costs and speed of

availability of temp staff from agencies.

Cost of training, attracting right talent, handling issues and claims of employee

benefits emerge are major challenges for the agencies. Emphasis on strategies to

strengthen temp engagement such as competitive pay, opportunities to become

permanent staff, training , executing an effective communication plan with the temp

on subjects of job performance, appraisals, feedback have been observed. Greater

emphasis on strategies to improved temp engagement by the agencies reveals that the

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agency understood the direct correlation between employee satisfaction and employee

productivity.