Viva La Revolution: Flexible Staffing Models in China

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Spend Matters welcomes this guest post from Mary Chen, senior manager, consulting, at GEP.

As the world's most populous country, China's labor market is undergoing unprecedented structural revolution. In recent years, due to labor shortages caused by a decreasing demographic pool and labor cost pressures, Chinese companies are eager to adopt more flexible staffing models to maintain labor agility and cost competitiveness. As per the Chinese Human Resource Service Industry Research Report published in 2016 by HRoot, it’s estimated that between 2016 and 2020, the average compound annual growth rate of China's flexible staffing industry will hold steady at around 22%, and China's flexible staffing market scale will reach about 60 billion yuan, which is more than $8 billion.

In 2014, China’s Ministry of Human Resources and Social Security (MOHRSS) released the “Interim Regulations on Labor Dispatch” — the first comprehensive labor dispatch regulation that imposed more strict obligations on employers, such as “labor dispatching arrangements are only applicable for temporary, auxiliary and replaceable positions” and “the number of total dispatched employees used by an employer should not exceed 10% of its total workforce.” This did not slow down the accelerated development of flexible staffing in China, as employers looked for ways to cut back on rising labor costs and employment risks.

In China, multinational companies are still the major customer group in the flexible staffing market, but several large state-owned enterprises or private enterprises also have begun to use these models to circumvent the labor management risk and employment pressure. In addition, large foreign service providers such as Adecco, Randstad and Manpower operate under such models, and some local leading HR service providers like Career International, Humanpool, Enigma and CTG have also occupied a large market share.

Currently, some of world’s leading HR service providers offer MSPs (Managed Service Provider) such as Randstad, Manpower, Alligis Group, Kelly Service and ZeroChaos in China. This type of model helps organizations to manage and optimize temp labor in a more effective way, requiring HR, procurement and operating departments to cooperate closely to set up MSP strategies. This results in reduced hiring costs, higher quality personnel and lower compliance risks — key characteristics needed for Chinese markets.

While you may think working remotely or having more freedom in your work life balance centers in Silicon Valley, more and more Chinese employees care about freedom in their career lives. Employers are meeting this need and new employment platforms and mobile applications for freelancers allow employees and employers flexibility with the times.

The flexible staffing sector is evolving rapidly in China and will further develop into a more large-scale, professional service model to bring better value and efficiency into the human resource management field and allow organizations to be more cost competitive.

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