Sectoral Trends: General Drives Demand as IT segment Declines

An overall comparison of flexi staffing workforce shows a 14 per cent growth in 2022-23 but a drop from the more than 21.9 per cent increase in 2021-22. A closer look at the numbers shows that there was a reverse trend seen in the past three quarters, as flexi staffing in India registered a meagre 0.4 per cent sequential growth in new hiring in the fourth quarter of FY 2022-23. The third quarter of the year witnessed the lowest growth in the last ten quarters. A strong base effect, which saw the year 2021-22 break all records in the creation of new and revival of old jobs, might be that the economy in India and globally finally started to open up in full measure after back-to-back COVID-19 waves. According to ISF, a robust demand for a flexi workforce after the third COVID-19 wave was largely driven by sectors like e-commerce, retail, manufacturing, and Banking, Finance Services and Insurance (BFSI). Over the course of 2021 and 2022, labour demand came from the retail, hospitality, tourism, e-commerce, logistics, banking, and infrastructure sectors.
When breaking down the numbers according to sectors, general flexi staffing which excludes IT flexi staffing recorded a growth of 15.3 per cent in new flexi jobs during FY23, helping add upwards of 1.47 lakh new flexi jobs. This is in spite of an increase in India’s unemployment rate in April 2023 to 8.11 per cent, from 7.8 per cent in the previous month. This upward trend in employment was particularly notable in sectors such as e-commerce, logistics, manufacturing, tourism and hospitality, FMCG, consumer durables, and healthcare. On the other hand, the IT flexi staffing segment, known to drive demand in the industry in the initial years, marked a year-on-year contraction of 7.7 per cent in new flexi jobs by the end of the last fiscal year. The decrease in demand in the IT staffing industry can be attributed to geopolitical factors emerging worldwide such as the decline in US markets, the Russia-Ukraine conflict, and the impact of global financial markets. As a result of these events, companies took measures to align their capacities with the demand to deal with emerging market pressures leading to slowing down of hiring.