India’s Flexi Staffing Growth Slows to 6.1% in First Quarter, Weakest Since Pandemic

India’s flexi staffing industry grew 6.1% year-on-year in the first quarter of the current financial year, the slowest pace for the period since the pandemic year of 2020, according to a report by the Indian Staffing Federation (ISF). The industry, which provides temporary and contract manpower across sectors, reported a modest 1.5% sequential increase compared with the previous quarter.

The slowdown reflects a mix of global economic headwinds, lower consumer spending, and delayed hiring decisions in key domestic sectors such as FMCG, retail, logistics, e-commerce, and manufacturing. The ISF report noted that companies are prioritising productivity improvements with existing staff before adding new contract positions.

“The April–June quarter indicates the changing face of formal employment growth, evidenced by a deceleration in flexi employment growth to 6.1% year-on-year — the slowest Q1 pace since the pandemic,” said Lohit Bhatia, President, ISF. “The moderation is mainly due to challenging economic conditions and reduced consumer spending.”

General staffing, which excludes IT and covers consumer-driven industries, grew 1.4% quarter-on-quarter and 5.8% year-on-year. Hiring in this segment remained cautious, with companies waiting for better clarity on market conditions, monsoon-linked demand, and budget allocations.

In contrast, IT flexi staffing continued to perform strongly, recording 5.5% quarter-on-quarter and 12.3% year-on-year growth. “The IT segment’s momentum underscores the non-cyclical nature of digital transformation demands,” said Manmeet Singh, Vice President of ISF. The growth of Global Capability Centres (GCCs) and rising investments in AI, cloud computing and digital services are fuelling specialised hiring, added Singh.

The slowdown in overall flexi hiring contrasts with India’s overall economic performance, which expanded a robust 7.8% in the April–June quarter. However, the growth was uneven, driven largely by services, government spending and construction, while consumer-linked sectors such as FMCG, retail and manufacturing remained on the back-foot. Persistent inflation and supply chain disruptions also weighed on these businesses, keeping non-IT hiring subdued despite the headline GDP momentum.

Data from ISF shows that the flexi staffing industry’s contribution to India’s formal employment has grown steadily over the past decade, with around 6.8 million people now working under formal contract arrangements. The sector contributed an estimated ₹1.47 lakh crore in annual salaries and ₹52,800 crore in social security and GST payments in the previous fiscal.

The overall flexi workforce employed by ISF members stood at 1.83 million at the end of June 2025, with 91,500 new formal positions created over the past year. The industry has seen steady expansion in formalisation since the introduction of GST in 2017, but ISF said the pace of new additions is now plateauing.

Despite the short-term slowdown, ISF expects the flexi staffing industry to maintain a long-term growth trajectory. It projects a compound annual growth rate of 17.3%, with the market size likely to reach ₹2.58 lakh crore by the next fiscal, led by growth in logistics, BFSI, and technology services.

For now, the staffing industry is watching the upcoming festive season and the second quarter closely. A pickup in consumer demand and investment spending could help reverse the trend and lift hiring momentum in the coming months.