Manpower subcontracting is the term that refers to outsourcing work to third party staff who are not on the employment rolls of the client. In the technology company, it is a common practice. At times clients do require manpower from the IT companies for a particular project, and not on a continuous basis. To meet such requirements of clients, subcontracting is done.

Even during economically challenging times, subcontracting helps to allow the exit of the outsourced manpower, as the contract terminates. Of course, there is a hanging axe always ready to fall on subcontracted manpower. Companies do not use outsourced manpower in key outcome-dependent projects and long-term projects. Subcontracted manpower is used for short-term projects.

The extent of outsourcing in Indian IT companies is currently 6-8 per cent, and overall in Indian tech industry it is 3 per cent. In the US, outsourcing goes to the extent of 18 per cent of its requirements. The growth of outsourced manpower in the IT is expected to be at least 6 per cent, with IT can contributing 8-10 per cent of this score in the next five years.

In the US and Europe, they opt to subcontract for 3-6 and 6-12 months respectively so as not to dilute the brand equity. Specific IT companies may use 15-18 per cent of their revenue on subcontracting. In India, companies such as HCL, Wipro and Tech Mahindra use subcontracting extensively.

Recession affects the direct recruitment. Companies will not have more permanent staff, and employs subcontracted staff. Immigration policies too affect the allotment of visas, and thus there is talent gap. At such times, the companies hire local talent.

In non-IT companies too, digitalization would improve job opportunities, and some of these opening will be filled up by outsourced staff. There could be a talent shift from IT to non-IT companies. It will go up in future.