Contractual hiring in India saw its slowest growth in four years during the last fiscal year, with a notable dip in the final quarter due to global uncertainties, new banking rules, and the post-festive season slowdown.
Temporary Hiring Slows to Four-Year Low
Indian companies increased their temporary hires by 9.7 percent in the financial year 2024-25 (FY25), adding 1.39 lakh new contract workers. This marks the slowest growth rate in four years, a significant drop from the 15.3 percent rise seen in FY24.
The pace of contractual staffing in FY25 was the lowest since the pandemic-hit FY21, which saw only a 3.6 percent increase. Despite the slowdown, sectors like Global Capability Centers (GCCs), e-commerce, logistics, manufacturing, and tourism continued to contribute to formal employment.
Overall, the total workforce managed by Indian Staffing Federation (ISF) members reached 18 lakh by the end of FY25.
Q4 FY25 Sees a Rare Dip
The final quarter of FY25 was particularly challenging for temporary hiring. New contract jobs actually fell by 2.5 percent compared to the previous quarter (October-December 2024).
This quarter-on-quarter decline is rare, marking only the second such instance since the nationwide lockdown in April-June 2020 during the early days of the COVID-19 pandemic. However, compared to the same period last year, short-term hirings were still up by 8.7 percent year-on-year.
Why the Caution?
Several factors contributed to this cautious market. Many organizations focused on reorganizing hiring to improve productivity rather than expanding their headcount, leading to lower demand for temporary staff across various industries.
Economic conditions and geopolitical uncertainties, including global trade disputes, prompted companies to pause their expansion plans. Additionally, the natural end of the holiday and festive season, which typically drives a surge in temporary jobs, also played a role.
New banking policies from the Reserve Bank of India, which issued directions to banks regarding the use of third-party service providers, further impacted demand for contract staff in the final quarter.
Sector-Specific Trends
Within the overall figures, general staffing, which forms the vast majority of temporary hires, saw a 2.6 percent quarter-on-quarter drop in Q4 FY25. For the full FY25, general staffing grew by 9.8 percent, its lowest increase in five years.
In contrast, IT staffing showed resilience, growing by 2.3 percent quarter-on-quarter in the January-March period. Crucially, temporary IT hires increased by 7.8 percent in FY25, rebounding after declines in FY23 and FY24. This growth was fueled by new GCCs and increased tech adoption in non-IT sectors.
The Importance of Contract Workers
Temporary workers play a vital role for companies, especially in sectors like e-commerce, retail, FMCG, logistics, and hospitality. They help businesses manage fluctuating demand driven by seasonal and other factors.
Currently, India has nearly 70 lakh contract workers. The staffing industry as a whole contributed a significant Rs 1.48 lakh crore towards salaries in FY25.
- Temporary hiring growth in India slowed to a four-year low of 9.7% in FY25.
- The final quarter of FY25 saw a rare 2.5% quarter-on-quarter decline in new contract jobs.
- Geopolitical uncertainties, new banking policies, and the post-festive season slump were key reasons for the slowdown.
- IT staffing showed a positive rebound in FY25 after two years of decline.
While the overall job market is constantly evolving, the trends in contractual hiring highlight how global and domestic factors influence employment patterns in India.
