Tamil Nadu hits top spot in manpower outsourcing in South India: CII Report

January 3, 2012:  The southern state of Tamil Nadu ranks first among the states in South India to rely on outsourced workforce. Based on statistics on manpower outsourcing in the southern states, published by Confederation of Indian industry, Tamil Nadu employs 33 per cent of the total 10 million outsourced workers employed in different industries. This figure does not include employees from the construction sector.

The report suggests that the manufacturing, and retail sectors are the ones which use outsourced employment the most. In addition to this the government sector too forms the largest user of outsourced employment.   

Among the sectors that are highly dependent on outsourced workforce, the manufacturing sector is the major donor of revenue with a proportion of 41 per cent, according to the study. The report also says that the blue collar employees’ amounts to 58 per cent of the total outsourced workforce and grey and white collar jobs amounts to 31 and 11% in that order. Large firms offered higher order services and small firms concentrated on soft services.

The increase in the number of players in soft services is mainly due to the absence of tight entry barriers, lack of difficulty in hiring and training people, lack of people with specific skills and increased demand.  The study has also observed a 30 per cent growth in the number of contract employees in the last three years and the firms believe that outsourcing will increase in the future too. Based on the response from 132 service providers who where surveyed, the intake of employees has been increasing at about 40 % over the last three years. It is believed that it will increase at a rate of 15 per cent in the future.

The firms are now changing their focus from quantity to quality. The report also noted that the sector will be represented by both small and large outsourcing service providers. The demand for contract employees is fulfilled by about 30,000 man power suppliers and contractors in the region.

The contractors provide both daily and weekly paid workers, and are dominant in the manufacturing and construction sector. Moreover there are hundreds of unregistered contractors in every state, with strength of less than 15 workers. The registered manpower service providers is relatively a large industry which is worth USD 120 billion, and the southern states have about 8500 manpower service providers. The industry is dominated with small and very small players with a proportion of about 95 per cent, but the big service providers generate about 75 per cent of the revenue.

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