In India, the reasons for engagement of contract labour are due to the restrictive conditions of Chapter VB of the Industrial Disputes Act. This Act mandates that any factory employing more than 100 workmen would require prior permission for lay-off, retrenchment and closure. Contract labour is on the rolls of the contractor and does not figure in the headcount of the permanent employees working in the company.
(This story appears in the 14 September, 2012 issue of Forbes India. To visit our Archives, click here.)