Redefining the 21st Century Labor Paradigm: Role of Contingent Workforce in the Indian Economy

Redefining the 21st Century Labor Paradigm: Role of Contingent Workforce in the Indian Economy

Shaurya Sharma (Xavier School of Management, India) and Shivankar Sharma (Shardul Amarchand Mangaldas & Co, India)
DOI: 10.4018/978-1-5225-2008-5.ch002


At a time when the Indian subcontinent is beset with a burgeoning population, rapid urbanization, and high disposable incomes, the Indian economy is at a precarious stage of balancing demand uncertainties with pressures to minimize bottom line costs. As a consequence, there is great reliance on a dynamic workforce, which comprises of temporary, contract, and casual laborers referred to as the contingent workforce. A talent war is looming on the horizon and employers need to buckle up their workforce armory with an unparalleled employee value proposition, making the business landscape a tricky vehicle to maneuver. A robust strategic framework bolstered by prudent workforce management will aid an organization to fulfill its goals while isolating it from any legal liability. Technology can be used to leverage data analytically for job assessment and aid in seamless project execution. In sum, an approach sensitive to the legal, technological and psychological pillars of managing workers provides a comprehensive mechanism to counter issues associated with contingent workforce management.
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As per a survey conducted by The Associated Chambers of Commerce of India (ASSOCHAM) in 2013, the contingent workforce has seen an increase at a rate of 39% (Associated Chambers of Commerce of India [ASSOCHAM], 2014). Changing work styles, low-key government involvement (with relaxed regulatory framework) and emphasis on consumer-driven economy have been instrumental in driving the growth of the Indian market. According to India Brand Equity Foundation, the Indian fast-moving consumer goods (FMCG) market alone is expected to increase at a compound annual growth rate (CAGR) of 14.7%, reaching $110.4 billion during the period 2012-2020 (India Brand Equity Foundation, 2016). Even though the manufacturing sector is facing a turbulent time, it is still the most labor-intensive industry (barring agriculture where disguised employment often distorts the employment figures), thereby providing employment to large scores of contingent workers. In such an environment, a number of business processes are dependent on out-of-payroll talent. This, in turn, warrants strategic management of such a workforce to meet the heightened human capital requirements of both the organization and potential employees.

Figure 1.

Striking a delicate balance in the labor market



In India, the proportion of the labor workforce to the overall population stands at 56% as compared to the world average of around 64%. The mismatch between male and female participation is glaring due to prevailing socio-economic factors, and the female labor force stands at a dismal 31% (among the lowest in the world) (Institute for Human Development, 2014). The informal sector (comprising of unincorporated and unorganized business units) employs an overwhelmingly large percentage of workers, and approximately 92% of the total workforce is engaged in enterprises ranging from small factories (SMEs) to pushcart vendors and agricultural labor (Planning Commission of India, 2007) (Korgaokar & Myrstad, 1997). Every second worker is self-employed in a small-scale economic activity, and every one out of three workers seeks employment on a day to day basis. Even among the 18% of the workers who are regular, less than 8% have a full-time employment which has a social protection scheme in place (Institute for Human Development, 2014).

The informal workers have negligible employee guaranteed social protection but the situation is changing due to recent intervention by the Government in the form of various national and state level social schemes (such as the Annapurna, Antyodaya Anna Yojana and Pension Schemes). However, most of the Indian labor laws apply to the formal sector, leaving the informal workers bereft of any legal safeguards. Poor education infrastructure combined with an unchecked growth of unorganised economy have led to rampant child labour (around 2% of children in the age group 5 to 14 were involved in labour in 2010) and debt bondage (Brown, 2008; International Labour Organization, 2008; Ministry of Statistics and Programme Implementation, 2014). A majority of laborers are uneducated, with approximately 30% of the workers having completed secondary education and only 10% of the workers having received any formal or informal vocational training (Swaminathan, 1991). The scarcity of regular employment makes access to skill acquisition programs limited, leading to an overlap between poverty and sub-standard employment quality (Chakrabarti, 2009). The labor scenario is further exacerbated by the fact the disadvantaged social groups (such as Scheduled Castes and Tribes) are disproportionately employed as low paid casual labors, especially in the low-productivity sectors, namely, agriculture and construction.

Key Terms in this Chapter

Contingent Workforce: A group of provisional workers who work on a non-permanent basis (temporary, part-time, outsourced and offshore workers, independent professionals, interns, and consultants).

Sham Contract: An employment relationship deliberately disguised as an independent contract, wherein the worker is engaged as an employee.

Labour Arbitrage: Movement of jobs to countries with inexpensive labor and cost of doing business, as a result of negligible barriers to international trade.

Employee Engagement: The degree to which employees relate to their jobs and are committed to the organization, thereby putting additional effort into their current work/task.

Data Management: Design and development of systems, policies, and procedures for effectively managing an organization’s information lifecycle needs.

Job Description: Formal documentation of an employee’s work tasks and responsibilities.

Information Asymmetry: One party has more or better access to information than the other, thereby creating a power imbalance in economic/social transactions.

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