India's software services companies may have seen slow growth over the last several quarters amid global macro economic uncertainties and clients in the west curtailing discretionary spending, but the IT (information technology) flexi staffing industry, which supplies temporary or contract IT professionals continues to see steady rise and is expected to clock a 7 per cent compounded annual growth through this financial year and the next.
According to the Indian Staffing Federation (ISF), the Indian IT flexi staffing market was worth $4.9 billion (around Rs 40,580 crore) in the financial year ended March 2024, employing 5.97 lakh people. By the end of the financial year ending March 2026, it is expected to be worth $5.6 billion, with a workforce of 6.63 lakh.
The global IT flexi staffing market was valued at $114.7 billion in 2023-24 and is expected to touch $137.3 billion by 2027-28.
While IT/ITeS companies continue to be the largest employers of contract IT professionals, demand is rapidly rising from the fast expanding global capability centres (GCC) in the country. There is also a growing demand for on contract IT professionals from the telecom sector and banks and financial services companies, as well as fintechs.
ISF data shows that while growth in IT flexi staffing in IT/ITeS sector is expected to decline 3 per cent in the current financial year and rebound 6 per cent next year, GCCs are expected to clock a strong 18 per cent growth in 2024-25 and 15 per cent growth in 2025-26.
IT flexi staffing in telecom sector is seen surging 25 per cent this year and 13 per cent in the next financial year. IT flexi staffing in BFSI and fintech is seen growing 5 per cent and 6 per cent respectively during the same period. The media and entertainment industry is also likely to see an 11 per cent growth in IT flexi staff in the current financial year, followed by 6 per cent growth the next year.
"From the IT flexi staffing industry perspective, what is important is not just the size of the segment, but also how much of penetration that segment takes as flexi staffing. While, IT/ITeS is the largest segment in India with a 3.1 million workforce, they actually take 5.5 per cent of their workforce as flexi staff, where as a smaller segment such as GCC at 1.3 million takes 8.2 per cent penetration. Even smaller segments like logistics, energy and utilities; BFSI and fintech take higher flexi staffing penetration at 14.6 per cent and 17.1 per cent," said Lohit Bhatia, president, Indian Staffing Federation.
A key thing Bhatia notes is that companies are increasingly embracing agile workforce strategies to navigate rapid changes in technology and client demands, leading to enhanced efficiency and innovation.
"Organizations are leveraging flexi staffing models to tap into specialised skill sets while maintaining cost-effectiveness. As digital transformation accelerates across sectors, this growth forecast underscores an optimistic outlook for both employers seeking talent agility and individuals looking for diverse career opportunities within the Indian IT ecosystem," he noted.
Application maintenance services is the top employer of IT flexi staffing workforce. At the same time a large number of companies are also seeking professionals with expertise in cloud computing. Separately, companies in sectors like logistics, energy, utilities and engineering have seen an uptick in drone technology adoption. Similarly, fast moving consumer goods companies are building consumer experience prototypes using Gen AI, driving demand for IT professionals with these skills, ISF pointed.
"A majority of applications and the skill sets that companies are looking at is the ERP business applications, the cloud suits, data science analytics, testing and QA (quality assurance) and web development," said Bhatia.
A lot of AI work is also now coming to India given the huge population we have.
"As we have a population of 1.4 billion people, and almost 900 million consuming internet, imagine the amount of data that we are all throwing out every day. AI needs that amount of data," noted Bhatia pointing that India has over 4 lakh professionals in the AI space now and that demand will only grow.
Importantly, ISF points that smaller cities like Coimbatore, Visakhapatnam, Mangalore, Kochi, Nashik, Varanasi, Dehradun and Shillong are among 45 emerging cities seeing high demand IT flexi staffing workforce.
Ease of doing business, talent availability, infrastructure attractiveness, strategic location and or special industry incentives are some of the reasons driving the growth in smaller towns, ISF pointed.
