CHENNAI: Even as job openings in the gig and temporary staffing sectors have surged 15–20% year-on-year during the ongoing festive season, manpower supply has not kept pace, with attrition rates hovering between 35% and 40%.
Human resource industry experts also warn that retaining the Goods and Services Tax (GST) rate on staffing services at 18%—combined with the removal of input tax credit (ITC)—could prompt companies to delay hiring of temporary staff due to rising costs. The absence of ITC may increase expenses by about Rs 3,250 for every Rs 18,000 monthly salary, they estimate.
“Over 2.16 lakh temporary and gig roles are being generated this festive season, marking a 15–20% year-on-year increase compared to 2024,” said Deepesh Gupta, Director and Head of General Staffing at Adecco India. “E-commerce leads with 35% of festive hiring, followed by logistics and quick commerce at 15% and 11%, respectively. There are sharp spikes in delivery and warehousing roles, while retail, BFSI, and hospitality are also showing strong manpower demand, especially across Tier 1 and Tier 2 cities.”
According to Gupta, the attrition rate in the sector remains elevated at around 35–40% per month. Warehouse operations alone are facing 10–12% higher vacancy levels than last year, with some regions reporting 25–30% unfilled roles.
Balasubramanian A, Senior Vice President at TeamLease Services, attributed the high attrition to frequent job switching among workers. “The gig sector continues to see high churn as workers move between platforms to maximise their daily earnings. This, coupled with seasonal migration during festivals such as Navratri, Diwali, and Dussehra, has created shortages in delivery and warehouse roles,” he said.
Temporary staffing crunch
The demand for manpower in temporary and gig sectors has risen to 2.16 lakh jobs this year from 1.75 lakh in 2024, but supply remains constrained. “Nearly 70% of these are gig-based roles, up from 65% last year,” Gupta added.
Recruitment and staffing firm CIEL HR highlighted two clear hiring trends. “First, companies are increasingly relying on temporary and flexi-staffing to manage demand volatility and control fixed costs. Second, permanent hiring has become more targeted—especially in IT and GCCs—where firms are hiring fewer people but focusing on specialists and niche skills rather than large fresher intakes,” said Aditya Narayan Mishra, CEO and MD of CIEL HR. “This is why we’re seeing robust growth in flexi staffing even as permanent headcount growth remains muted.”
The Indian Staffing Federation (ISF) noted that while temporary staffing continues to expand, its year-on-year growth rate for FY2024–25 has slowed compared to post-COVID years.
“Following the September 2025 GST rate cuts, temporary staffing is yet to see the full impact on new job creation. Companies are currently ramping up hiring in e-commerce, retail, and auto sectors to capitalise on festive demand,” said Suchita Dutta, Executive Director of ISF. “The gig economy, meanwhile, is growing faster, driven by lower taxes on goods that have boosted consumption. Reforms correcting inverted duties—such as reducing GST on manmade fibre to 5%—have improved agility in staffing. Although flexi-staffing growth slowed to 6.1% in Q1 due to initial adjustments, post-cut momentum could revive hiring.”
Reports also indicate a likely rise in informal hiring, as companies reassess workforce strategies to maximise agility and operational efficiency. Temporary staffing currently employs around 7.2 million workers in India.
“The attrition rate in India’s temporary staffing sector generally ranges between 17% and 40%, depending on industry and role,” Dutta added. “High turnover stems from the project-based nature of assignments and the lure of better pay or location elsewhere.”
Mishra added that attrition varies by segment. “For blue-collar or frontline roles, attrition rates are typically higher—around 5–8% per month—because of the nature of the work and multiple earning options for workers,” he said.
GST dilemma
Despite recent cuts in GST rates for goods, the 18% levy on services remains unchanged—posing a challenge for staffing firms and their clients.
“The 18% GST on staffing services increases employer costs by about ₹3,240 per ₹18,000 salary, potentially pushing jobs into the informal sector and hindering formal hiring growth,” said Dutta. “These additional costs will now have to be borne by companies, as the government has removed ITC benefits.”
ISF estimates that reducing GST on staffing services to 5% could unlock 15–20 million formal jobs and generate Rs 1–1.5 lakh crore in long-term tax revenue.
However, Rishi Agrawal, CEO and Co-founder of TeamLease RegTech, disagreed that GST rates significantly affect hiring demand. “Temporary staffing is primarily driven by demand surges—such as festive seasons, project requirements, or business expansion cycles—rather than taxation structures,” he said. “While higher GST rates increase costs for employers, there is no direct correlation between GST rates and hiring trends.”
He added, “What GST does influence is the cost efficiency of formal staffing agencies. Higher rates can strain MSME liquidity and widen the cost gap between formal and informal labour. However, when demand spikes, businesses have no choice but to hire, as workforce availability directly impacts revenues and service delivery.”
