India's gig and contract workforce is undergoing a significant transformation, offering businesses flexibility and access to specialized talent while providing workers with diverse employment opportunities. Contract workers, in particular, play a crucial role in India's evolving labor market. In the formal manufacturing sector, 41% of workers were on contract in FY23 (ASI survey data), marking a significant rise from previous years. Contractual hiring across industries has grown at a 15% CAGR since 2022, and this trend is expected to continue as businesses seek flexible workforce arrangements. Demand is being driven by key sectors such as consumer durables, IT, e-commerce, Global Capability Centres (GCCs), and retail, especially for specialized skills in GCP (Google Cloud Platform), Data Analytics, AI/ML, and administrative roles.
Simultaneously, the gig economy is expanding rapidly, projected to create approximately 90 million jobs and contribute 1.25% to the country's GDP by 2030, according to a white paper by the Forum for Progressive Gig Workers. The gig workforce currently stands at around 9-10 million, expected to rise to 23.5 million by 2030, constituting about 4.1% of India's total workforce (Nasscom Aon Report). Quick commerce (Q-comm), e-commerce, and transportation services are key drivers of this surge, with gig hiring expected to grow by 60% in 2025 compared to 2024.
Despite the flexibility and employment opportunities contingent work provides, significant challenges remain, including job stability, career growth, well-being, and communication gaps. Recognizing these issues, the Indian government is taking steps to support workers, such as formally registering gig workers, providing identity cards, and ensuring access to welfare initiatives. The rise of Tier II and III cities, driven by lower living costs and improved infrastructure, is further shaping the future of employment for both gig and contract workers.
To better understand the challenges and expectations of on-demand workforce, we at Randstad India conducted an in-depth qualitative study amongst the workforce employed across BFS, Retail, Manufacturing and Engineering sectors. Our research highlights key areas where employers can enhance engagement, including career growth, training, well-being, and communication. We also examine the rising role of Tier II cities in workforce expansion and its implications for employers. Through this paper, we aim to shed light on these evolving trends and provide insights to help organizations build a more sustainable and inclusive work environment to attract, retain and nurture a thriving contingent workforce.
understanding the workforce shift : how employers can respond to changing expectations
career growth and upskilling: beyond temporary roles
One of the biggest concerns among contract workers is the absence of structured career progression. While contract roles provide an entry into established organizations, limited growth opportunities often lead to stagnation. Employees face hurdles such as infrequent promotions, unclear role transitions, and minimal salary increments.
Continuous learning is critical in India's evolving job market, yet many contract workers face a significant gap in ongoing skill development. Recognizing this need, the government has allocated Rs 334.45 crore for training initiatives, including Mission Karmayogi, to upskill civil servants including contract workers by fostering a culture of continuous learning.
To bridge this gap, employers can:
- Define clear career pathways through mentorship programs, skill-based promotions, and internal mobility opportunities.
- Facilitate upskilling by offering training programs, certifications, and digital learning platforms.
- Improve conversion rates by providing high-performing temporary workers with opportunities for full-time roles.
- Foster long-term engagement by recognizing and rewarding skills enhancement with salary increments or project-based incentives.
By integrating these measures, organizations can enhance job satisfaction and retention among contract workers, ultimately benefiting workforce stability and productivity.
well-being, communication, and flexibility: key employee expectations.
The lack of social protections for contingent workers makes well-being initiatives essential. To address job uncertainty, limited benefits, and inadequate health insurance, the government is implementing support measures such as identity cards, PM Jan Arogya Yojana, and a national database for social security access.
One of the most common frustrations among contract workers is the lack of direct communication with their employers. Many employees struggle with automated systems, impersonal HR processes, and delayed responses to critical queries. They prefer a human touch — a dedicated HR representative or support system that provides clear guidance on contracts, payroll, and career opportunities.
While contingent jobs inherently provide some level of flexibility, workers are increasingly looking for better work-life balance. Many employees prefer work arrangements that reduce long commutes, offer hybrid or remote options, or allow for flexible shifts.
Employers can enhance workforce well-being, communication and flexibility by:
- Prioritizing financial stability through timely payments, health insurance coverage, and retirement benefits.
- Implementing wellness programs that focus on mental health support, ergonomic workspaces, and stress management.
Providing clear communication channels to address worker concerns, moving beyond automated responses to direct HR engagement. Businesses can also create multilingual support channels, and ensure proactive communication to significantly improve engagement and trust.
the rise of tier II cities and talent migration.
Rising urban costs and infrastructure improvements are making Tier II cities increasingly attractive for contract workers. Many employees prefer working closer to home due to lower living expenses and family support. Employers that expand hiring in these cities can tap into a growing talent pool while benefiting from lower operational costs. Investments in local offices, training centers, and digital hiring solutions will further accelerate this trend.
For many contract workers, migration decisions are driven by financial incentives and career growth potential. Employers offering relocation allowances, accommodation support, and cultural adaptation assistance will have a competitive advantage in attracting and retaining mobile talent.
conclusion.
India’s contingent workforce is shifting from a job-seeking model to a career-building ecosystem. Workers are prioritizing growth opportunities, continuous learning, fair pay, and a workplace culture that values well-being and direct communication. The rise of Tier II cities presents a significant opportunity for employers to diversify hiring strategies while lowering operational costs. The Union Budget 2025-26, with its emphasis on inclusive growth and employment incentives, further signals a commitment to uplifting gig and contract workers.
Organizations that adapt by improving career pathways, investing in workforce development, embracing flexible work models, and ensuring compliance with evolving labor laws will not only enhance employee retention but also build a more engaged and future-ready workforce.