Principal Employer Perspective
Contracting out jobs has become a dominant feature in the today's industrial world. This practice leads to better utilization of resources and helps in increasing the competitiveness. Many successful companies create subsidiaries to look after the non core activities to improve their cost effectiveness. Even the developed countries are today looking to countries like India to become competitive and optimize their business operations. A number of Business Process Outsourcing and Knowledge Process Outsourcing have been set up in India in the last two decades to provide skilled and effective manpower at cheaper rates. These companies are much more organized than the industrial contractors.  
1. The process of hiring and retrenchment of contract labour is easier in comparison to permanent workers but the Government has been abolishing the role of contract employees in operation after operation.
2. This has led to a difficulty in meeting short term targets because extra hands needed for short term are not available to the industry. This is hurting the competitiveness of the Indian companies especially in the export industry.
3. The Government had set up a Group Of Ministers committee in 2000 to consider the recommendations of the labor ministry to suitably amend the provisions of the Contract labour Act and facilitate the outsourcing of work through professional firms as well as maintaining the rights of the contract labour (prevent the exploitation at the hands of contractors).
4. After much deliberations, the committee suggested that certain activities which form the support activities can be excluded from the Section 10 of the existing Act but the recommendations were not implemented upon.
5. The main discontent starts because of two opposite school of thoughts - while the government believes that companies want to employ contract labour for cost savings , industry believes it is about flexibility