Manpower outsourcing in South to grow 15 percent - Business Standard
CHENNAI, 29th Dec 2011, 0:46 IST

The outsourcing industry in South India, which is around Rs 27,000 crore at present, would see around 15 per cent growth in addition to employees in future, with more focus on quality rather than quantity, according to a report by the Confederation of Indian Industry (CII). Among the other Southern States, Tamil Nadu tops in outsourcing employment.

As per the report on Manpower Outsourcing in Southern States, around 10 million (which is around 22 per cent) of the estimated workforce of around 45 million of the select sectors in South India are outsourced. The sectors of interest include banking and finance, fishing and poultry, government departments, IT and ITeS, manufacturing except public sector, retail and trade, service outlets in automotive, services, tourism and travel and transportation including shipping, rail and road.

The outsourced employee base in the region is four times the employment in the IT and ITeS sectors across the country and is comparable to the total workforce in registered manufacturing units. It is also nearly half the size of the total employees of Government of India.

Manufacturing, retail and government sectors are the largest users of outsourced employment. The organizations expect a shift in focus on quality, rather than quantity, which would create a more productive and flexible workforce.

“There has been a 30 per cent increase in the number of contract employees over the last three years and the organizations expect outsourcing to grow in future too. According to the 132 service providers who were surveyed, the addition to employees that has been growing nearly 40 per cent in the last three years is expected to grow around 15 per cent in future,” says the report.

Around 30,000 units of staffing providers and contractors are registered with the Department of Labour, in South, while there is unregistered contractors in each state, who operate with less than 15 personnel. There are around 8,500 organized staffing service providers in South India, with an employee base of 1.7 million and billings of over Rs 12,000 crore, in fiscal year 2010.

Recruitment by these contractors is primarily from rural and semi-urban areas. Women constitute 5-6 per cent of the workforce while over 65 per cent of the workforce is in the age group of 20-30 years, added the study. However, the sector is also facing challenges including increasing competitiveness in the market, higher attrition rate and lack of clarity in regulations. The government needs to address the regulatory issues and has to create a regulatory framework that would enable higher opportunities for the sector. Labour Act has to be made more uniform and comprehensive, added the report.