The Economic Times reports that staffing and recruitment firms in India are witnessing a pickup in contractual hiring in the sector after almost a year of subdued demand. A pickup in contractual hiring often indicates improvements in the demand environment for IT services providers. According to experts, this is typically followed by hiring for permanent roles.

Amid a slowdown in tech spending by clients in markets like the US and Europe, Indian IT companies had cut down on hiring and, in some cases, resorted to layoffs. This has reduced their bench strength, or employees who are not assigned any project. As they win new projects, hiring temporary employees helps companies quickly deploy workers to meet client requirements. "With layoffs reducing this reserve (bench), the current contractual hiring rate has surged by around 40-50% compared to the same time last year," said Neeti Sharma, CEO at TeamLease Digital.

Executives at other staffing firms like Quess, Adecco, CIEL HR, Xpheno, and Michael Page also said contracts were making a comeback. According to experts, companies ramp up contract hiring based on their strategies to be prepared for future demand, order book positions and specific client demands, among other things. As global uncertainties stabilise, they said increased IT spending is expected.

Michael Page said it had seen a 22% year-on-year increase in overall contracting, including by IT services companies, during the January-March quarter. "Sectors such as consumer durables, IT, e-commerce, GCCs and retail have a major demand in contract hiring," said Pranshu Upadhyay, regional director at Michael Page India.