Manpower supply business in India: A guide

An efficient employee is an excellent asset for your organisation and helps balance the business. Manpower staffing involves market searches, reviewing, interviewing, and determining suitable payment packages, making it complex.

Sometimes, businesses lack the resources to meet their talent needs. This is where a manpower agency comes in. They hire a manpower agency or consultant to find workers with the right skills for the job. But what exactly is a manpower supply business? How do these companies operate? And how to start labour supply business on your own? Let's find out. 

What is a manpower or labour supply business?

A manpower supply agency provides human capital, matching skilled workers with organisations that need specialised employees. These agencies offer various services, particularly job placement, by pairing skilled workers temporarily with companies facing high workloads in specific departments.

Companies can hire manpower either in-house or outsourced. In-house manpower supply services involve recruiting a dedicated human resource team for various roles. This method ensures transparency, quick actions, and direct communication between employers and employees, leading to better understanding and engagement.

Outsourced manpower supply services are provided by specialised agencies that recruit candidates for the company. These agencies excel at identifying project requirements and can be cost-effective since they can be hired on a contractual basis as needed. They also reduce the company’s burden by handling the hiring process and negotiating salaries.

Both in-house and outsourced manpower services have their benefits and limitations. The choice, however, is in your hands. Outsourced services are a good option if you want to save on costs, effort, and time. On the other hand, in-house services are preferable if you seek direct communication and engagement with candidates. 

Benefits of Outsourcing Manpower Supply Services

• Cost-Effective:

Instead of hiring full-time recruiters with limited resources, you can outsource manpower supply services as needed to reduce costs and ensure you get the best talent for your company.

• Easy Coordination:

Recruiting involves a lot of coordination between the employer and the employee. Manpower supply agencies act as mediators, making the process much more manageable.

• Better Quality:

Manpower supply companies have the resources to build a pool of skilled workers and give you a quality workforce. They are adept at identifying candidates with the necessary skills and training.

• Quick Service:

The manpower supply companies have extensive data and contacts to hire small and large workforces quickly. Compared to in-house hiring, they provide faster staffing solutions. Every business aims to achieve success and higher profits with optimal costs and performance. Repeatedly hiring and firing employees can be expensive. However, hiring the right candidate after assessing their skills and talents leads to better productivity.

How to start manpower supply business in India?

1. Plan Your Business

Start by planning the different aspects of your business and decide on a business name, target audience, customer acquisition strategy, your specialisation, office space and location, growth plan, and funding needed. Along with these details, pick the industry you wish to cater to. For example, you can opt to focus on manpower supply services for senior and middle-level management or choose to start an International Manpower Resources Private Limited specialising in Offshore Manpower Recruitment. To select a niche and sector (like IT companies, manufacturing companies or tax consultancies), dig deeper into concepts of market understanding and competitor analysis.

2. Business registration

 A registered business offers less liability, better growth opportunities, and easier access to capital. To start your manpower supply company, you must register your company with the Service Tax Department, Ministry of Overseas Indian Affairs (if applicable to your company), Employer State Insurance and provident fund. 

To register your business, you will need the following documents-

• Passport-size photos of the owner (or owners)
• PAN Card
• Identity Proof (Passport, Voter ID, Driving License)
• Address Proof (Bank Statement, Mobile Bill, Electricity Bill, Internet Bill)
• Aadhar Card
• Business Office Address Proof (Electricity Bill, Internet Bill, Mobile Bill)

Also, decide whether you wish to register your manpower supply company as a Private Limited Company, One Person Company, or Limited Liability Partnership, depending on your needs.

3. Tax Registration and Licences

Post registration, you must obtain the following registration certificates-

• GST Registration (if annual revenue exceeds Rs.40 lakhs)
• MSME Registration for easy bank loans and tax incentives
• Shop and Establishment Act License (within 30 days of opening)
• ESI Registration (if employing more than ten individuals)
• PF Registration (if employing more than 20 individuals)
• Trademark Registration to protect your brand
• Manpower Supply Licence 

For international recruitment, apply for a Recruiting Agent License from the Ministry of Overseas Indian Affairs. The documents required for this include-

• Application in the set format
• Demand Draft of Rs.25,000
• Passport-size photos of owners
• Business owner details and activities
• Digital Signatures
• Bank Guarantee of Rs.50 lakhs
• Balance Sheet Statement
• IT returns of Directors
• Graduation Degree

4. Investments

The initial investment for a manpower supply business ranges from Rs.5 to 10 lakhs. This covers office rent, repairs, systems setup, salaries, utilities, marketing, and more. You must decide on a funding option. Depending on the available finance and other factors, you can fund your manpower business idea through bank loans, angel investors, crowdfunding platforms, venture capitalists, and startup India funds. 

5. Create Your Online Presence

An online presence is crucial. Buy a domain name and create a website. This helps build a database of companies and candidates. Also, get formal email addresses for communication.

6. Consider Online Job Search Engines

Find clients and candidates through job search websites like Naukri, Monster.com, and Indeed. These portals provide a steady flow of qualified candidates and job openings.

After the complete set up, what remains is deciding on office space as per the norms in India and hiring quality staff for your company. You can also prepare aptitude tests to match candidates with suitable jobs based on their skills and interests. Some of the top manpower supply companies in India have set up their own methods to match the correct candidate with the profile. Apart from the methodologies, you can also look up to the top manpower supply companies in India for how they operate, the kind of services they offer, and how they have established their brand in the market. For reference, let us look at a few manpower supply companies in India.

Top Manpower Supply Companies in India

1. Acreaty Manpower Outsourcing Company:

This company is dedicated to providing skilled candidates for both short-term projects and long-term business needs. It offers a single-window solution for all your outsourcing requirements, from field acquisition to productivity reports, to reduce your company's costs. Acreaty also offers an employee self-service (ESS) portal where employees can access company policies, holiday lists, salaries, taxes, and other personal information. It also provides:

• Temporary workforce solutions
• Permanent employees
• Third-party payroll candidates
• Market research
• Data Analytics
• Content development
• Training and development
• Business research

2. RKCO Group

The organisation is one of India's top labour outsourcing sources. RKCO Group uses a unique strategy to select the best candidates for your company. They thoroughly screen each candidate based on their aptitude and skill set. They also ensure each candidate is medically fit for the job. RKCO Group serves many industry sectors, including engineering, petrochemicals, healthcare, retail warehousing, hospitality, real estate, supply chain services, IT, banking and finance, electrical engineering, and outsourcing. The company also addresses various productivity issues a company might face. They offer services such as:

• Training and Development
• Search and Selection
• Warehouse Management Services
• Labor Services
• Office Management in Delhi
• Attrition Analysis
• Inventory Management

3. Xeam Ventures

Xeam Ventures Pvt. Ltd. is a top labour solutions company in India. As a CMMI Level 3 certified organisation, Xeam Ventures has provided excellent staffing and recruitment solutions in India for over 13 years. Xeam uses simple yet effective methods to outsource professional candidates. The company screens individuals through internal resources, talent acquisition, and industry connections. The company offers services in-

• HR Policies and Processes
• Recruitment Process
• JD and KRA Establishment
• Retention Strategy Management
• Performance Management
• Industrial Relations Arbitration
• HR Data Mining
• HR Audit

Conclusion

Starting a manpower supply business can be highly profitable, but thorough research and planning are crucial beforehand. You'll need to handle plenty of paperwork and comply with government rules, so it's wise to seek advice from a seasoned business lawyer. By planning meticulously and executing your plans well, you can establish a thriving contract manpower supply business. This will enable you to offer essential services to local companies effectively.

FAQs

Q1. What are the eligibility criteria for obtaining a manpower supply business licence in India?

• Your company must be registered under the Indian Companies Act, 2013.
• You need to have an office located in India.
• A bank guarantee of Rs.25 lakhs is required.
• You must have an office space of at least 150 sq ft in India or abroad.
• Your business should have been operational for a minimum of five years.
• You should have a clean record without any convictions for offences involving moral turpitude or fraud, punishable by imprisonment exceeding three years.
• You must not be insolvent or nearing insolvency.
• There should be no history of default on loans from financial institutions or government agencies in the five years before your application.

Q2. What is the GST service charge of a manpower supply agency?

Ans. GST on manpower supply, labour services, and staffing/recruitment (temporary and permanent) is set at 18%. Therefore, a manpower supply agency can only levy an 18% service charge for these services.

Q3. How are the manpower supply agencies paid?

Ans. A manpower supply company can charge the hiring companies a flat fee or a percentage of the employee’s annual salary.