Every thriving business in today’s world is powered by one key element: a dependable workforce. In India, where the workforce is abundant and diverse, this has given rise to a robust manpower supply industry that caters to businesses of all sizes and sectors. As globalisation accelerates, outsourcing has become the norm. Hence, the need for reliable manpower services has surged.
As a result, manpower supply agencies have emerged as a crucial link, bridging the gap between job seekers and businesses. This guide offers an in-depth look at the nature of the manpower supply business, its prospects, legal considerations, and more.
What is meant by Manpower Supply Services?
Manpower supplyrefers to providing human resources to other businesses on a temporary, contractual, or project-specific basis. Companies often outsource their non-core activities, like security, housekeeping, logistics, and IT support, to a manpower supply agency to reduce costs and streamline operations.
A manpower supply agencyacts as a critical intermediary in these arrangements. It assists businesses in the following ways:
- Candidate sourcing and screening: These agencies find and evaluate candidates based on specific parameters, ensuring they meet client requirements.
- Payroll and compliance: They handle salary payments, tax deductions, and statutory compliances, reducing the burden on business. Agencies ensure that all labour laws and contracts are in place, thereby reducing legal risk for clients.
- Reduced hiring burden: Businesses save valuable time and resources that otherwise would be spent on recruitment and onboarding.
- Flexible workforce management: Agencies offer scalable staffing solutions, helping businesses adjust workforce size as needed. This is especially useful for seasonal business setups.
- Consistent job flow for workers: Workers benefit from steady employment opportunities through agency tie-ups.
Benefits of a Manpower Supply Business
The manpower supply industry has immense potential in a country like India. With the country experiencing a demographic dividend, India is projected to add at least 179 million people to its working-age population by 2045.
Hence, this makes the role of a manpower agency even more essential in channelling this workforce into gainful employment. Running a manpower supply agency is beneficial because of the following reasons:
- High demand across sectors: From construction and manufacturing to IT and retail, multiple sectors constantly require contractual staff through manpower supply services.
- Recurring revenue model: Contracts with clients often last several months or years, offering consistent income for a manpower agency.
- Low setup costs: Compared to product-based businesses, initial investment requirements are minimal. This primarily involves office space, legal registration, and workforce recruitment through manpower services.
- Scalability: Once a manpower supply agency establishes a pool of reliable workers and a client base, scaling to new regions or industries is relatively straightforward.
However, providing manpower services comes with its own set of challenges. A manpower agency must ensure compliance with labour laws and maintain service quality, which requires continuous efforts.
What is the Nature of a Manpower Supply Business?
At its core, manpower supply is a service-oriented, B2B model. Manpower supply agencies provide manpower services to their clients based on specific job requirements. The nature of this business is characterised by:
- Contractual Engagements: Workers are typically employed by the manpower agency but work at the client’s premises.
- Labour Law Compliance: Agencies must ensure that labour regulations are duly followed, like Provident Fund (PF), Employee State Insurance (ESI), and other regulatory procedures.
- Reputation-Driven Growth: As a service industry, client satisfaction and worker reliability are crucial for word-of-mouth referrals and contract renewals for any manpower supply agency.
What are the Sources of Manpower Supply?
A manpower agency can use some of these sourcing channels:
- Job Portals and Online Platforms: Websites like Naukri, Indeed, and LinkedIn are used to source skilled professionals for manpower supply.
- Local Labour Recruitment: Recruitment drives can be held in rural and semi-urban areas to tap into untapped labour potential for manpower services.
- Skill Development Centres: Many government and private institutions offer vocational training to individuals. Manpower agencies can organise recruitment drives in such institutions.
- Worker Referrals: Current employees or workers can also bring in referrals, especially in sectors like housekeeping, security, or warehousing, where manpower services are in high demand.
What is the Legal and Regulatory Framework for Manpower Services?
A manpower supply agency needs to carefully navigate the legal landscape for the long-term sustainability of its operations. Some standard compliances that need to be fulfilled are:
- Company Registration: The manpower agency needs to be registered as a private limited company, partnership, or proprietorship.
- ESI Registration: ESI scheme provides social security to the workers. ESI registration is required for businesses employing over 10 individuals (in some states it is 20 employees.)
- GST Registration: If the annual turnover exceeds a specific limit, the service attracts 18% GST.
- Labour Licences: The Contract Labour (Regulation and Abolition) Act, 1970 mandates that a labour licence is essential for any manpower agencythat engages 20 or more contract workers
- Business Codes for Tax and Registration Purposes: The SAC Code for GST is 99851, applicable for manpower supply services. The Business Activity Code (ITR) is 16007 which is used for filing Income Tax Returns.
Conclusion
The manpower supply business in India is a viable and increasingly rewarding venture for entrepreneurs. Whether you’re planning to launch a new manpower agency or refine your existing operations, access to sustained financial support can ease the initial setup and growth phase of your business.
Tata Capital’s msme loan services offer quick approvals and flexible terms making it easier for you to manage setup costs, payroll, and operational growth. And when it comes to invoicing and tax complianceTata Capital’s gst calculator is a simple tool to help you calculate GST accurately and save time on manual calculations.
Visit the Tata Capital website or download the app today, to learn more!
FAQs
Yes, manpower services offer strong returns due to its high demand, contract renewals, and relatively low startup costs.
It provides temporary or contract staff and handles their recruitment, payroll, and legal compliance for client companies.
Agencies use job portals, local hiring drives, vocational centres, and referrals from existing workers, to source their workforce.
The SAC Business code is 99851, classified under Chapter 9985 for support services excluding agricultural activities.
14 May 2025
5 mins read
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