Engaging Contract Labour In India - Risk And Mitigation Measures

India's extensive and low-cost workforce presents an attractive proposition for foreign businesses with overseas expansion plans, as well as for organisations looking to outsource business-support requirements. It is not uncommon for personnel-heavy industries (such as IT/ITeS, BPOs etc.) and support functions in a company (like HR, finance, legal etc.) to engage external contractors to hire additional personnel for their requirements.

For instance, Company XYZ will contractually engage an external contractor to supply workers (i.e. 'contract labour') for a certain duration or project. The contract labour may be deployed to render work directly for Company XYZ and may even be based on Company XYZ's premises. However, the contract labour will formally be hired by the external contractor and not directly by Company XYZ (i.e. these workers will be maintained on the employment rolls of the contractor, who will also be responsible for payments and labour compliances on