Flexi staffing in India’s IT sector to grow at CAGR of 7% by FY26

Bengaluru: Flexible (Flexi) staffing in information technology (IT) industry is expected to grow at a compound annual growth rate (CAGR) of 7 per cent from fiscal year 2024 (FY24) to FY26, according to a report by Indian Staffing Federation (ISF) released on Thursday. About 38 per cent of organisations surveyed cited ease of doing business and talent availability as the main reasons for considering IT flexi staffing across different cities. 

Flexi staffing is a strategy that allows businesses to hire workers on a temporary or project basis instead of full-time.This comes at a time when IT industry has mostly been on a look out for hiring people from campuses.

Karnataka has the lion’s share in this flexible staffing market valued at $1.4 billion, followed by Telangana & Maharashtra. IT/ Information technology enabled services (ITeS) and global capability centres (GCCs) employ 49 per cent of this workforce in India.

Strikingly, the penetration of the tech force is around 50 per cent in non IT companies including banking, insurance and retail among others. Sectorally, banking, financial services and insurance (BFSI) and fintech have the highest IT flexi workforce penetration at 17.1 per cent followed by logistics, energy and utilities at 14.6 per cent. 

GCCs have also been witnessing an uptick in flexi hiring, with an 8.2 per cent presence of temporary workers. This can be attributed to the rapid growth of GCCs and a higher demand for flexible staffing to meet diverse requirements. On the other hand, the IT sector's share in contractual workers is lesser, at 5.5 per cent. 

Commenting on this disparity, Lohit Bhatia, President, ISF said, “IT/ITeS is a very mature sector and majority of the hiring that they do is in the fresher category from campuses. This category is well suited to work with these companies and get trained accordingly. Flexi staffing is usually called on niche areas like consulting, strategy. A few of these sectors have rules suited for outsourcing, hence, contractual staff is higher.” 

Globally, the IT flexi staffing market is valued at $114.7 billion in FY24, with USA, Japan and UK topping it. This global market is expected to grow at a CAGR of 3.6 per cent to touch $137.3 billion by FY28. 

Additionally, the Asia-Pacific (APAC) region is the fastest growing IT staffing market with Australia at the forefront, followed by India, in the southern belt. Meanwhile,China, Australia, Singapore, Malaysia and Vietnam are amongst the top emerging markets in APAC regions. 

Although the growth in this market is inclined positively, it has been affected by various geo-political conflicts in Europe & Middle East. Inflation peaking amid low growth has also led to reduced affordability, demand and spending by clients in FY24.