When a plant manager says “we need people”, there are at least five ways to get them, and they differ in one question above all: whose rolls the workers are on. That decides who pays wages, who deposits PF and ESI, who carries the legal risk and how quickly you can scale up or down. Here is a plain comparison.
1. Manpower outsourcing
An agency supplies workers who stay on the agency’s rolls and work at your site. The agency is the employer and handles wages, PF, ESI and registers; your company is the principal employer. It suits steady shift strength for work that is ordinarily done through contractors: helpers, loaders, packers, housekeeping, and many operator roles.
Two legal points matter. Under the OSH Code, the contract labour provisions apply where 50 or more contract workers are employed, and a contractor with 50 or more must hold a licence. And contract workers may do core activities only where that work is ordinarily done through contractors, is intermittent, or involves a sudden rise in volume. See Contract labour in Maharashtra for the detail.
2. Contract and temporary staffing
The same principle as outsourcing, but for a defined period: a seasonal peak, a new line ramping up, cover for leave or a project. The workers are on the agency’s rolls for the duration. The value is speed and flexibility; the cost is that the people leave when the contract ends, so knowledge goes with them.
3. Fixed term employment
You hire the person directly, on your own rolls, for a set period written into the contract. Under the Labour Codes a fixed term employee gets the same wages and benefits as a permanent worker doing the same work, including leave and social security, and becomes eligible for gratuity after one year. The Ministry of Labour’s FAQ confirms that fixed term employment covers only people engaged directly by the employer, not workers supplied by a contractor. It suits core roles where you want the person on your books without a permanent commitment.
4. Permanent recruitment
An agency finds, screens and presents candidates; you hire the chosen person onto your rolls permanently. The agency’s job ends at joining, usually with a replacement period if the hire leaves early. It suits supervisors, engineers, quality, maintenance, accounts, HR and IT roles where continuity matters more than flexibility.
5. Turnkey workforce
The provider takes responsibility for a whole function, such as a packing line, a warehouse shift or facility services, with its own people, supervision and compliance, and is measured on the output. You define the result, not the headcount. It suits work that is clearly separable from your core process.
How to choose
- Is the work core to the plant? If yes, and it is not intermittent or a sudden surge, lean towards direct hiring: permanent or fixed term.
- How long is the need? Weeks or months points to contract staffing; a steady year round need points to outsourcing or direct hiring.
- Who should carry payroll and compliance? If you want one accountable party, outsourcing or turnkey moves it to the provider; you still keep the principal employer’s duties.
- How fast must you scale? Agency rolls flex faster than your own.
- What happens to skills? Roles where training takes months are expensive to rotate through short contracts.
What each route really costs
Comparing only the agency fee misleads. With outsourcing or contract staffing, the rate you pay covers wages, the employer’s PF and ESI shares, bonus, leave and the agency’s margin, and the agency carries the payroll work. With direct hiring, permanent or fixed term, you pay those same statutory costs yourself plus your own HR and payroll effort, and a recruitment fee once at joining. Turnkey contracts are priced on the output, so the comparison is against your own cost of running that function.
The hidden costs sit elsewhere: the supervisor’s time spent training people who leave in a month, scrap and rework from untrained hands, and lines running short. A slightly higher rate from a provider that keeps people longer is often the cheaper option over a year.
Questions to ask any provider
- Whose rolls will the workers be on, and who issues their appointment letters?
- How do you screen and test for the trade before deployment?
- How quickly do you replace someone who leaves, and at whose cost?
- Which compliance documents do we receive each month?
- Who supervises the workers day to day?
Many plants use more than one at once: outsourced helpers and loaders, fixed term operators for a new line, and permanent recruitment for supervisors. Our services cover each route, and we are glad to help work out the mix for a specific site.
This is a plain summary for general information, not legal advice. Laws, rates and limits change; check the official source before acting on a figure.
Sources
- Ministry of Labour and Employment: Compliance Handbook for Employers under the Four Labour Codes (February 2026)
- Ministry of Labour and Employment: FAQs on Labour Codes (30 December 2025)
- Ministry of Labour and Employment: Additional FAQs on Labour Codes (16 March 2026)
- PIB, 21 November 2025: Government makes the four Labour Codes effective