Slide 1:HR Outsourcing And Contract Labour Global Competitiveness and Challenges for Indian Labour Hyderabad August 25, 2007


Background :Organization Man; William Whyte Long Service, Obedience, Loyalty, Male IBM; 50%, 40%, 30% Organizational deconstruction and diversity Process Outsourcing People Outsourcing India’s opportunity and crisis Export jobs or import people But labour laws untouched since 1991; relative velocity divergence Background


India’s Insider labour market :Insider Structure 1 billion, 400 million, 30 million, 8 million 8% of labour force positioned self interest as national interest Facts 100 million entering labour force in 10 years Coming Unemployment crisis; 29% by 2020 94% of unemployed are between 15 & 34 years Three fatal flaws/ assumptions Idealism the good is the enemy of the great Averaging one size fits all Stability the world is predictable and linear India’s Insider labour market


What challenges these assumptions? :What challenges these assumptions? World of Work Intellectualization Competition; lower fixed costs and capex Relationship; expectations, career paths, Tata Code Service and Project businesses Corporate life expectancy Supply Chain deconstruction Workforce Diversity


What challenges these assumptions? :India Labour force/ Demographic downsides Lopsided GDP makeup Employment Elasticity; labour saving bias Unemployability Unorganized Temping Unemployment Inability to afford social security What challenges these assumptions?


Case for Temporary Staffing :Case for Temporary Staffing Public Policy Perspective Unemployment reduction; liquidity provider Outsider Access Lowers Unorganized arbitrage Cost of social security, unemployment insurance Improved employability Stepping Stone; apprenticeship Boosts Entrepreneurship & Productivity


Case for Temporary Staffing :Case for Temporary Staffing Employer Perspective Strategic flexibility; Lower Fixed Costs and Capex Auditioning permanent candidates Matching expertise Access Diversity Scalability; service and project businesses Just in time labour; handle fluctuations Differential pay for special skills


India’s Temping Market :Size Govt. estimate at 21.6% of the labour force (80 million people!) Organized Sector; Less than 1% of total Key Issue; Regulatory Cholesterol Contract Labour Act 1970 Industrial Disputes Act 1947 Unintended Consequences Outsourcing to informal sector Rotation; lower human/ organizational capital Unorganized Temping; political/ criminal nexus Blue collar wage differential Reforms can create 12 million jobs India’s Temping Market


Global Temping Experience :USA Responsible for 50% of unemployment reduction in 90s (Katz 2001) EU Responsible for 11% of job creation in 90s (CIETT 2001) Spain Reduced the duration of unemployment by 20% (Bover 1998) Germany 50% moved onto permanent jobs (Mcginnity & Mertens 2004) Japan Responsible for 90% of new jobs in 90s (Shugyo-Kozo KC 2002) ILO Replaced 50 year Convention 96 with Convention 181 Global Temping Experience


Conclusion :Contract Labour Accept past abuses but drunk driving Objectives of CLRA; regulation, abolition or development? Socrates Slave Good is not enemy of great; EGA? No progress because no MOE? India is still work in process Farm workforce/ Farmer suicides represent the failure to create non-farm jobs Coming Unemployment explosion; demographics, employability 400 million Tryst with Destiny Unique time in India But the journey will not be worth the trip without jobs CNBC debate Conclusion


Slide 11:HR Outsourcing And Contract Labour Global Competitiveness and Challenges for Indian Labour Hyderabad August 25, 2007