Contractual hiring in Q4FY25 hit by geopolitics, new banking rules and end of festive season, says Indian Staffing Federation

Indian Express

2 days ago

Temporary hirings by Indian companies increased at the slowest pace in four years in 2024-25 (FY25) as demand for short-term staffing was hit by geopolitical uncertainty. According to the Indian Staffing Federation (ISF), the industry body for over a hundred flexi-staffing companies, new contract hires rose by 9.7 per cent in the last fiscal to 1.39 lakh, with sectors such as Global Capability Centers (GCCs), e-commerce, logistics, manufacturing, and tourism and hospitality, among others, contributing to new formal employment generation.
However, the increase in temporary staffing in FY25 was down from a 15.3 per cent rise in FY24. At 9.7 per cent, contractual staffing in FY25 was the lowest since a 3.6 per cent up-turn seen in the coronavirus pandemic-hit FY21. In total, ISF members' workforce stood at 18 lakh at the end of FY25, the industry body said on Wednesday.
Temporary workers have become increasingly important for companies in sectors such as e-commerce, retail, fast moving consumer goods (FMCG), logistics, and hospitality, among others, as they help meet fluctuations in demand due to seasonal and other factors.
According to the ISF, there are nearly 70 lakh contract workers at present in India, with the staffing industry as a whole contributing Rs 1.48 lakh crore towards salaries in FY25.
The final quarter of FY25 was particularly bad for temporary workers as new jobs were 2.5 per cent lower compared to the third quarter that ended in December 2024. This was only the second time since April-June 2020 – when much of the country was forced to shut down to contain the spread of the coronavirus – that new temporary hirings fell on a quarter-on-quarter (QoQ) basis. Short-term hirings were up 8.7 per cent year-on-year in the final three months of FY25.
Why companies turned cautious on hiring in Q4FY25
'The fourth quarter of FY25 saw a cautious market. Many organisations aimed to reorganise hiring to utilise better productivity, leading to a late-year lowering demand for the temporary workforce across industries,' the ISF said in a statement. 'This dip was particularly pronounced as economic conditions destabilised, prompting companies to pause expansion and headcount additions amidst trade wars.'
Also adversely impacting demand for short-term workers was the end of the holiday and festival season and new banking policies, the ISF said. According to Suchita Dutta, executive director at the ISF, these new banking policies refer to directions from the Reserve Bank of India in late 2024 to banks on the use of third-party service providers for certain activities. This policy change, Dutta said, contributed to weaker demand for contract staff in the final quarter of the fiscal.
Within the headline number for the fourth quarter, demand was lower for general staffing, which fell 2.6 per cent q-o-q but was up 9.8 per cent in FY25 as a whole – the lowest increase in five years. General staffing makes up for an overwhelming majority of overall temporary hirings and accounted for 1.36 lakh of the 1.39 lakh new jobs in FY25.
Meanwhile, IT staffing rose 2.3 per cent q-o-q in the January-March quarter. Crucially, temporary IT hires rose 7.8 per cent in FY25 after falling by 7.7 per cent and 2.3 per cent in FY23 and FY24, respectively.
'IT staffing industry continued to witness new demands from new GCCs and also from steady growth in new employment as project ramp-ups in services sectors. The gradual new employment growth in Q4 FY25 is also aided by non–IT sectors, which significantly has started investing back with the tech adoption,' the ISF said.
The contract jobs data from the ISF comes after the Statistics Ministry said on Tuesday that the all-India unemployment rate was unchanged in June at 5.6 per cent, although joblessness increased by 20 basis points (bps) in urban areas to 7.1 per cent among those aged 15 years and above. The Statistics Ministry does not make a distinction between temporary and permanent jobs, with the monthly labour market data based on the Current Weekly Status (CWS) approach. Under this approach, the activity status of a person is measured for the seven days preceding the date of survey. Monthly data from the Ministry of Statistics and Programme Implementation is not available for the final three months of FY25.
Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy.
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