The Hindu : Business : Rising demand for contingent staff in U.S.

Online edition of India's National Newspaper
Friday, Oct 15, 2004

Business

Business

Rising demand for contingent staff in U.S.

By K. T. Jagannathan

CHENNAI, OCT. 14. An aging workforce, shortage of skilled personnel and the government imposed restrictive rules on job-induced responsibility on employers have all conspired to propel an increased demand for contingent staff in the U.S., according to Ranjan Sinha, Chairman, Summit HR Worldwide, a San Jose-based $10 million BPO (business process outsourcing) company that lays much store by application out location model.

In a freewheeling chat with The Hindu, Mr. Sinha said the contingent staff industry in the U.S. had been growing at about 20-25 per cent, indicating that the economy was turning around. Retailers such as Wall Mart, he said, were the largest employers of temporary staff. In Silicon Valley, over 90 per cent of assemblers were `temp staff', he pointed out. The unwillingness on the part of companies to increase fixed cost and their keenness to go in for a flexible workforce were principal drivers for `outsourcing', he said. This sense of accommodation towards flexi workforce and `outsourcing' stemmed from factors such as compensation risk associated with workers insurance, medical care liability, social security pay-out and cumbersome, at times tougher, tax complaint procedures. Given this backdrop, the contingency staffing industry had a huge role to play, he said. The move towards flexi workforce would trigger a win-win situation for all.

Mr. Sinha, however, clarified that the company was engaged in the process of enhancing the profitability and service quality of the U.S. contingent staffing and pay-rolling industry through the use of technology, process excellence and out location of service to India. He insisted that Summit HR would facilitate companies hire contingent staff, mainly locals from within America.

Mr. Sinha said Summit would acquire HR services firms that had rich gross margins but very thin net profit.

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