Exploring Employee Leasing in India: A Comprehensive Guide

31 of January, 2023

Are you interested in exploring employee leasing in India? If so, you’ve come to the right place. This comprehensive guide will provide you with all the information you need to know about employee leasing in India.

From understanding what this practice is to learning about the laws and regulations in India, this guide will cover all aspects of this matter. We’ll also discuss the cost of it and the pros and cons of this practice and how a HR reports can help with it. So, let’s get started.

What is Employee Leasing?

Employee leasing is a form of outsourcing that involves an employer contracting with a leasing company to provide them with employees for a certain period of time.

The leasing company is responsible for recruiting, hiring, and managing the employees, as well as providing benefits and payroll services. The employer pays the leasing company for the services provided, and the leasing company pays the employees.

This is a great option for businesses that don’t want the hassle of recruiting, hiring, and managing employees. It can also be beneficial for businesses that don’t have the time or resources to train and manage employees.

Employee leasing is becoming increasingly popular in India as it allows companies to access a larger pool of skilled workers. It also helps businesses save money on recruitment fees, payroll taxes, and other costs associated with hiring employees.

Employee Leasing in India

Employee leasing has become increasingly popular in India in recent years. There are a number of Indian leasing companies that offer their services to businesses. These companies are responsible for recruiting, hiring, and managing employees, as well as providing benefits and payroll services.

Leasing companies in India typically offer their services on a contract basis. This means that businesses can hire employees for a specific period of time, allowing them to scale their workforce up or down as needed.

Leasing companies in India can also provide businesses with access to a larger pool of skilled workers. This makes it easier for businesses to find the right people for the job.

Overview of Employee Leasing in India

Employee leasing in India has experienced rapid growth in recent years, with approximately 1.4 million leased employees across the country in 2020. This number is expected to rise to 2.5 million by 2025.

The main areas of India where leased employees are most often found are in IT, finance, hospitality, retail, and healthcare. The majority of these services are provided by staffing agencies, who employ leased workers for short-term, interim roles.

As the country continues to modernize and expand, employee leasing will become an increasingly attractive option for businesses in India.

Employee Leasing Laws in India

In India, the lease of employees is governed by the Indian Contract Act. This act states that contracts between employers and leasing companies must be in writing and must include the following information:

1. The scope of work to be performed by the leasing company.
2. The terms and conditions of the contract.
3. The duration of the contract.
4. The compensation is to be paid to the leasing company.
5. The rights and obligations of both parties.

It’s important to note that leasing contracts must also comply with local labor laws and regulations.

Leasing Services in India

The leasing companies in India typically offer a range of services. These services include:

1. Recruiting and hiring employees.
2. Training and development.
3. Performance management.
4. Benefits administration.
5. Payroll services.
6. Legal compliance.

Employee leasing companies in India can also provide businesses with access to a larger pool of skilled workers. This makes it easier for businesses to find the right people for the job.

The Cost of Employee Leasing in India

The cost of employee leasing in India varies depending on the services provided and the duration of the contract.

Generally, the cost of leasing services in India ranges from 5-25% of the total salary of the employee. The cost of leasing services also includes recruitment fees, payroll taxes, and other expenses associated with hiring employees.

It’s important to note that the cost of leasing in India is typically lower than the cost of recruiting and hiring employees on a permanent basis. This makes employee leasing a cost-effective option for businesses.

Pros and Cons of Leasing in India

The practice of leasing in India offers a number of benefits for businesses. However, it’s important to consider the pros and cons of employee leasing in India before making a decision. Here are some of the advantages and disadvantages of this practice in India:

Pros

1. Cost savings: Leasing can save businesses money on recruitment fees, payroll taxes, and other expenses associated with hiring employees.
2. Flexibility: Businesses can hire employees for a specific period of time, allowing them to scale their workforce up or down as needed.
3. Reduced risk: Employee leasing reduces the risk of hiring the wrong person for the job, as the leasing company is responsible for recruiting and hiring the employees.
4. Access to skilled workers: Employee leasing gives businesses access to a larger pool of skilled workers, allowing them to find the right person for the job.

Cons

1. Limited control: The leasing company is responsible for managing the employees, which means that businesses have limited control over their workforce.
2. Lack of loyalty: Employees leased through a leasing company are not loyal to the business and may be more likely to leave.
3. Legal risks: Businesses are responsible for ensuring that their leased employees comply with local labor laws and regulations.

Conclusion

Employee leasing in India is becoming increasingly popular as it allows businesses to access a larger pool of skilled workers and save money on recruitment fees, payroll taxes, and other costs associated with hiring employees.

However, it’s important to consider the pros and cons of leasing employees in India before making a decision. Businesses should also make sure that their leasing contracts comply with local labor laws and regulations.

We hope this guide has provided you with all the information you need to know about employee leasing in India. To keep up to date with everything related to human resources, stay on the blog of Sesame HR and don’t miss a thing.