A single, centralized contract workforce management system can help Indian manufacturers achieve cost savings and operational efficiencies by managing their contract workforce more effectively. Current point solutions are no longer sufficient due to challenges like contractor reluctance, paper-based processes, workforce churn, and compliance issues. Manufacturers need a system that automates the entire contract workforce management process, provides real-time visibility across locations, ensures compliance, and interfaces with ERP systems to drive data consistency and cost control. This will help manufacturers address the growing complexity of contract labor management.

1. A single, centralized contract workforce management
system can help Indian manufacturers achieve cost
savings and operational efficiencies
The Evolving Role of
Automation in Managing
Contract Labour

2. 2
Manufacturers in India are increasingly turning to
contract labour as a flexible, cost-effective resource
that can help them achieve key business goals. Today,
manufacturing companies have employed 15 million
workers, which amounts to a quarter of all
manufacturing workers1. Enterprises originally started
deploying contract or “badli” labour in an effort to cut
costs. But as reliance on contract employees continues
to grow, there is an opportunity to drive both cost
savings and operational efficiencies by managing the
contract workforce more effectively. To realize these
benefits, however, manufacturers must recognize
contract labour management as key driver of
operational success and put systems in place to
automate processes, provide visibility, and enable
better control over contract workforce utilization.
This paper outlines the challenges involved in contract
labour management and the potential consequences
of failing to optimise existing processes through
automation. It also discusses why manual, semi-
automated, and point solutions are no longer sufficient,
and how a single, centralized solution that automates
the entire contract workforce management process can
help manufacturers drive cost savings and operational
efficiencies for true competitive advantage.
Introduction
Source: 1:
https://frontline.thehindu.com/economy/article30911557.ece#:~:text=According%20to%20data%20from%20the,the%20country%20in%2
0that%20year.

3. 3
Direct financial losses
due to:
• Over-invoicing by
contractors
• Contractor deployment of
the same resource for
multiple labour supply
contracts or job-based
contracts
• Contractor labour
payment “leakages”
Indirect financial losses
due to:
• Need for additional
employees to manage
contract labour
• Lack of central visibility into
the workforce — from the
manufacturing unit level to
the Chief Human Resource
Officer
• Use of multiple, disparate
methods and tools for
managing contract labour
processes across the
organisation
Increased compliance
and legal risk due to:
• Inaccurate salary
payments
• Nonadherence to work
rules such as overtime
limits or consecutive shift
policies
• Deployment of contract
labour lacking the proper
skills and certifications to
perform a specified job
Damage to an
organisation's
reputation due to:
• Contract workforce
dissatisfaction
• Unfavorable media or
third-party attention
As India’s legislation changes and work hours fall under increased scrutiny, organisations that choose to ignore contract
labour issues are likely to face serious consequences. Failure to optimise contract labour management may result in:
Ignoring Contract Labour Issues Comes
at a Cost
Source 2 : Future of Work: Trends at Work and Workplace 2019

4. 1
2
3
4
5
4
Why Current
Solutions Are
No Longer
Enough
In India, the systems used by manufacturers to
manage contract labour are typically individual
software modules that address specific workforce
management functions rather than the entire
process. These point solutions were developed for
the basic purpose of keeping track of contractors,
and as the contractor ecosystem continues to
flourish, they have failed to scale to meet evolving
requirements. Reasons for these failures include:
Contractor reluctance: In many cases, contractors may be hesitant to deploy an automated system that
provides labour tracking and a detailed audit trail because it eliminates any chance of manipulating
data and gaming the system for monetary gain.
Paper-based processes: Because manufacturers’ contract labour-related processes are essentially paper
trails, it is difficult to automate these manual workflows using existing systems due to the dynamic
nature of managing a contract workforce.
Contract workforce churn: Many contract labour jobs require minimal skill levels, and as a result,
employees are easily replaceable. This leads to greater churn amongst contract employees, which in turn
creates challenges in setting up an automated process for effective tracking.
Geographic challenges: Because many manufacturers in India operate units across multiple locations
and maintain relationships with multiple contractor vendors, it is challenging to build a single system
that meets all enterprise requirements. Most manufacturers have chosen to build local contract labour
management systems to address the specific requirements of individual units.
Compliance issues: Since contract labour is not considered to be part of the organisation's workforce,
many manufacturers maintain manual systems for contract employees and automated systems for
direct employees — an approach that results in additional complexities and compliance challenges.

5. 5
A Better Approach to Contract
Workforce Management
When it comes to managing the growing contract workforce, disparate point
solutions will no longer suffice. Today’s Indian manufacturing organisations
require a complete contract labour management system that provides an
integrated suite of automated tools and real-time visibility into high-quality
labour information to help them control costs, improve productivity, and
minimise compliance risk enterprise wide. Key characteristics of an effective
contract labour management system include:
Complete process automation: A solution that simply captures contract
employee attendance data leaves HR and Finance with time-consuming
manual reconciliation tasks to help ensure accurate billing and payment.
Automated enforcement of work-related policies: Because manufacturing
organisations carry liability for contract employees, it is critical that the system
accurately implements and consistently applies work-related policies across the
contract workforce.
Real-time visibility: Manufacturing organisations need visibility into the contract workforce — from the unit and plant level rolling
up to the enterprise level — in order to gain unified and cross-functional insights and drive better decision making.
Compliance support: Manufacturers require an automated system that accurately enforces internal policies and local government
rules to help facilitate compliance.
Process standardisation across multiple locations: By using a single contract labour management system across multiple locations
and units, manufacturers are better able to enforce local policies while maintaining enterprise-level governance and validation
control.

6. 6
Secure, automated data collection: A solution that
automatically captures accurate time and attendance
data for contract employees at work sites helps
manufacturing organisations prevent contractors from
manipulating data and over-invoicing.
Labour budget and cost tracking: By accurately capturing
and automatically tracking contract employee time and
costs, a contract labour management system helps
manufacturers to take corrective action to minimise
labour budget overspend for more profitable operations.
Workforce productivity monitoring: An automated
contract labour management system enables
manufacturers to establish uniform performance
standards for all contractors and to monitor contract
employee productivity to help ensure ongoing adherence.
Interfaces with ERP system: To drive data consistency and
avoid duplicate data entry, it is important that an
organisation’s contract labour management system can
automatically transfer data to and from its ERP system.
Manufacturers need the ability to send master data
updates for contractors, contract workers and work
orders from the ERP system to the contract labour
management system and validation for contractor
invoices from the contract labour management system to
the ERP system.
Source 2: Future of Work: Trends at Work and Workplace 2019
People feel increased
AUTOMATION in workforce
management will POSITIVELY
impact employee perception
on FAIRNESS & EQUALITY 2
82%
Did You Know?

7. 7
Addressing Growing
Contract Labour
Management
Complexity
In order to control costs and improve operational
efficiencies, manufacturers need a centralized system
that automates the entire contract workforce
management workflow — from contractor registration
and work order processing to bill verification and
statutory reporting. In addition, they require a system
capable of supporting the work order type under which
contract labour is engaged at their manufacturing units:
• Labour Supply Work Orders: The contractor deploys
workers per the requirements specified by the
manufacturing unit and is paid for the time that those
workers are used by that unit within a given billing
period.
• Job Basis/Schedule Rate Work Orders: The contractor
is paid for the amount of work carried out at a rate
specified for a unit of measurement, such as items
processed or pieces assembled, rather than the
amount of time workers are utilized. The contractor
deploys workers according to the amount of work that
needs to be performed.

8. 8
At the manufacturing unit level, the typical process flow for managing
contract labour includes the following nine steps — all of which must be
addressed by the system in a seamless and integrated manner:
▪ Registration of Principal Employer: Information such as Employer
Name, Address, PF Code, ESI/WC code are recorded in the system.
▪ Registration of Contractor Vendor: Information such as Contractor
Name, License Number, Max Contract Workmen, PF Code, and ESI/WC
validity period are recorded in the system.
▪ Work Order Processing: Work order details are imported from the
ERP system into the contract workforce management system and the
requirement is issued to the contractor vendor.
▪ Registration of Contract Employee: Information such as Name,
Unique Identification Number, Address, Skill, Trade, and Certifications
is recorded in the system.
▪ Scheduling of Contract Employee: The Contractor Vendor schedules
contract employees based on organizational requirements and the
skill criteria that is specified.
▪ Time and Attendance Tracking: Contract employees mark
attendance (clock in and out) using time clocks or biometric
terminals.
▪ Bill Verification: At the end of each month, the manufacturing
organisation validates the contractor vendor’s invoice using bill
verification reports.
▪ Statutory Compliance: The organisation generates statutory reports
to demonstrate compliance with the Contract Labour Regulation &
Abolition (CLRA) Act.

9. 9
The typical contract labour management
process flow

10. 10
UKG® workforce management solutions meet the complex requirements of today’s large
manufacturing organisations in India. These proven solutions provide complete automation of
contract labour management processes using a two-pronged approach:
UKG InTouch® data collection terminals enable contract employees to record and track their
hours easily and efficiently by simply swiping a card or badge. Optional biometric identification
allows employees to clock in via finger scan for added protection against fraudulent punching.
Once the InTouch verifies the employee’s identity, it records the time and attendance data and
reports it to UKG Workforce Central®. The InTouch’s ability to automatically capture accurate
timekeeping data for contract employees helps eliminate any scope of error — inadvertent or
otherwise — in contractor billing to help control labour costs. In addition, the InTouch’s modern
user interface provides a fast, self-service view into contract employees’ work-related
information.
The UKG Workforce Central suite provides integrated software to automate the complete
contract labour management process and delivers real-time access to workforce-related
information for better control and improved decision-making. Workforce Central aggregates
contract labour data and manages complex work rules. The software requires little or no
customisation and can be configured by non-technical staff. Workforce Central can generate
time and labour reports or it can feed data into an ERP business intelligence system for
reporting and analysis. The system can also transfer data into financial systems at the end of
each month, if desired, for cost tracking, budgeting, and reporting purposes.
The powerful combination of these two complementary solutions — UKG InTouch terminals and
Workforce Central — helps manufacturers boost productivity and increase compliance while
reducing contract labour costs.
How can the UKG Solutions Help The UKG solution
automates the
complete contract
workforce
management
process to help
Indian
manufacturers
control labour costs,
improve
productivity, and
minimise
compliance risk.

11. 11
Contract Workforce
Management Process
Comprehensive Management and Statutory
Reporting
The UKG solution provides a comprehensive set of a
reports classified as “management” or “statutory.”
Sample statutory reports for CLRA compliance
include:
Form XII Register of Contractors
Form XIII Register of Workmen
Employed by Contractor
Form XVI Muster Roll
Form XVII Register of Wages
Form XVIII Register of Wages cum Muster
Roll
Form XIX Wage Slip
Form XXIII Register of Overtime
Form XXV Annual Return of Principal
Employer (to be sent to the
Registering Officer
Form XXIV Half Yearly Return
of the organizations
engage contract
staff comprising at
least 10% of its
workforce3
85%
Source 3: Future of Work: Trends at Work and Workplace 2019
Did You Know?

12. 12
The UKG Solution
• Automation of contract labour
management processes
• Real-time visibility using UKG InTouch
terminals
• Centralized architecture for easy system
management
• Interface to existing ERP systems for
work order integration
• Holistic view of labour budget and cost
expectations with bill verification
• Accurate contract workforce-related
data such as continuous worked days,
overtime, licenses, and views of on-
premise employees
• Comprehensive reports showing detail at
every stage of the process
• Reduce contract labour costs through complete automation and
enhanced visibility
• Leverage the contract workforce as a strategic resource to improve
operational efficiencies
• Reduce contractor over-billing by accurately tracking workers’ time
and attendance
• Increase productivity by giving frontline managers access to real-
time data for better decision making
• Balance productivity and costs by flexing the contract workforce
based on current demand
• Drive positive change with detailed insights into labour processes
• Minimise compliance risk with accurate interpretation of internal
work policies and government labour laws
Benefits
Features

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About UKG
At UKG (Ultimate Kronos Group), our purpose
is people™. Built from a merger that created
one of the largest cloud companies in the
world, UKG believes organizations succeed
when they focus on their people. As a leading
global provider of HCM, payroll, HR service
delivery, and workforce management
solutions, UKG delivers award-winning Pro,
Dimensions, and Ready solutions to help tens
of thousands of organizations across
geographies and in every industry drive better
business outcomes, improve HR effectiveness,
streamline the payroll process, and help make
work a better, more connected experience for
everyone. UKG has more than 12,000
employees around the globe and is known for
an inclusive workplace culture. The company
has earned numerous awards for culture,
products, and services, including consecutive
years on Fortune’s 100 Best Companies to
Work For list. To learn more, visit ukg.com.
Conclusion
Manufacturers in India continue to rely heavily on contract employees
as a flexible, cost-effective way to align labour to demand. This trend
has created a largely untapped opportunity to reduce costs and
increase operational efficiencies by optimizing contract labour
management effectiveness. Manual and semi-automated workflows
simply cannot address the growing complexity of contract labour
management in the manufacturing sector. At the same time, using
disparate point solutions at various manufacturing units does not
provide the enterprisewide visibility and control Indian
manufacturers need to achieve operational excellence.
Today’s manufacturers need a single, centralised solution that
automates the entire contract labour management process and
integrates seamlessly with ERP and finance systems to help them
control costs, improve productivity, and minimise compliance risk for
bottom-line results.