Trends in Staffing Industry
We will be soon ushering into a new post pandemic world which will have new supply chains, new technology, new ways of conducting business and will create new jobs. Owing to robust demand, we can expect a strong rise in economic activity as the GDP is expected to grow in double digits leading to an inflection point in staffing requirements. Companies across all the sectors are projecting high earnings growth, capital formation and capex plans which should translate into robust job creation.
In my understanding the following themes will play out:
- Digitalization: Every business from large to small has a digital strategy which is under some stage of implementation. We have seen huge demand for lateral hiring as IT companies and Tech Start Ups have high growth plans. This led to high attrition and salaries for some IT profiles almost tripled in some cases. This phenomenon will continue for the next 2 to 3 quarters before we see some normalization.
- Productivity = Pay: Many CHROs have expressed that they would want the staffing arrangement to link pay to productivity especially for transaction based and project-based jobs. Though a few companies have moved to this model, it remains aspirational at this point in time. With the growth of Gig economy this will definitely come into the fore in the near future.
- Managing Diversity: Some companies are looking to hire high percentage of female employees. A few e-commerce companies have demanded Specially abled staff. Staffing companies will have to fine tune their recruitment tools to manage diversity expectations of clients across gender, skill and geography mix.
- Technology in Staffing: Most of the staffing companies have moved from manual processing/ computation to software based tools to manage associate life cycle. AI/ML based recruitment engines have been introduced and as soon as some of these players gain higher maturity of bots and data collection, we can expect some disruption in how conventionally staffing companies operated.
- Economic Activity: Currently most of the client companies are focused on meeting the festival season demand. What is notable is almost every business leader in every sector has mentioned that they see robust pick up in demand which will last long and have announced capex plans. The Government of India with its PLI policy in 13 sectors have enabled businesses to encash China +1 opportunity. This will reflect huge demand in manufacturing over the next few years. With Banks & NBFCs coming out of their NPA issues, FY 23 will see great amount of growth opportunities. Even the PSU banks have rolled out their Fintech products in payments and broad-based loans. New start-ups are focusing on B2B2C plays which is driving manpower requirement for enrolling merchants and shops. We can expect high single digit growth in Consumption sector with food, consumer staples and durables and retail gaining traction. Even economy sectors like real estate, home improvement, infrastructure, and capital goods are witnessing demand coming back.
- Solutions Approach: Many companies are expressing the need for a broad-based business support solution over a plain vanilla staffing service. Pricing has been under tremendous pressure for general staffing companies and a solutions approach is a must to get back the pricing power. This is possible when the sales approach is based on meeting the business metric of the client rather than just addressing HR metric.
- Good days for smaller staffing players: Many CHROs have expressed how happy they are with the flexibility and agility offered by smaller staffing companies. Implementation of technology/Saas tools has created a level playing field and companies are now in a better position to compete & manage client engagement due to improved unit economics.
Mayur Taday, CEO at Calibehr Business Support Services Pvt. Ltd.