Manpower Consultancy

Fees vary based on the type of hiring model you deploy: Permanent Recruitment: Typically 8.33% to 12% of the candidate's annual CTC (Cost to Company) for entry-to-mid-level roles (roughly equivalent to 1 month's salary). Executive searches can go up to 15% to 25%. Contract Staffing: You charge the client the actual cost of the worker's salary + benefits, plus a fixed 10% to 20% service markup or a fixed monthly management fee per head.

Legitimate, ethical agencies never charge job seekers. Top global standards and domestic labor acts explicitly forbid charging candidates for interviews, visa processing, or job training. All operational revenue is collected directly from the employer/client side.

For basic permanent placement (headhunting), initial costs are low. However, if you are doing contract staffing/outsourcing, you need significant working capital—typically 3 to 6 months of runway. This is because you must pay the contract workers weekly or monthly, while large corporate clients frequently operate on 30, 60, or even 90-day invoice payout credit cycles.

​Standard Recruitment: An agency acts as an external vendor, sending resumes for specific open job vacancies on a success-fee basis. ​Recruitment Process Outsourcing (RPO): A deeper corporate partnership where the client outsources their entire internal hiring department to your consultancy. Your team handles everything from employer branding and tech screening to final onboarding.

Here is a realistic financial breakdown for setting up and running a 5-person recruitment agency (1 Founder/Director + 4 Recruitment Consultants). ​This projection assumes a hybrid or modest physical office space model, utilizing modern cloud-based recruitment software. ​🚀 1. One-Time Setup Costs (Capital Expenditure - CAPEX) ​These are the upfront costs required to legally establish the business and equip your team before making your first placement. Expense CategoryItemized DescriptionEstimated Cost (INR)Estimated Cost (USD) Legal & RegistrationCompany Incorporation (Private Limited preferred by B2B clients), GST registration, Shops & Establishment license, and basic corporate lawyer fees for client contract drafting.₹25,000$300 Office Space Deposit3-month rental deposit for a modest 5-seater co-working private cabin or small commercial office space.₹90,000$1,050 Hardware & IT Setup5 Mid-range business laptops, 5 VoIP headsets, dual-band Wi-Fi router, and networking setup.₹2,50,000$2,950 Office FurnishingErgonomic chairs, desks, basic interior decor, and visitor seating (omitted if using a fully furnished co-working space).₹60,000$700 Branding & Digital IdentityProfessional website development, logo design, domain purchase, and corporate brochure setup.₹35,000$400 TOTAL SETUP COSTInitial investment to open doors₹4,60,000$5,400 📉 2. Recurring Monthly Expenses (Operational Expenditure - OPEX) ​These are the monthly fixed and variable burn rates required to keep the agency running efficiently. Expense CategoryItemized DescriptionMonthly Cost (INR)Monthly Cost (USD) Team SalariesFixed base salaries for 4 Recruitment Consultants (assuming ₹35,000/month average base salary). Note: Commission bonuses are excluded as they are paid out of closed deals.₹1,40,000$1,650 Office Rent & UtilitiesMonthly rent for a 5-seater private managed workspace (includes electricity, water, maintenance, and cleaning).₹35,000$410 ATS & CRM Software5 User licenses for a recruitment platform (e.g., Zoho Recruit, Manatal, or Ceipal) at roughly ₹3,500 ($40) per user.₹17,500$200 Premium Job Boards1-2 Enterprise LinkedIn Recruiter Lite seats, plus job posting credits on major local portals (e.g., Naukri, Indeed).₹40,000$470 Calling & CommunicationCloud telephony system (e.g., RingCentral, Exotel) for high-volume outbound screening calls, plus high-speed internet.₹10,000$120 G-Suite & Admin Tools5 Business email accounts, cloud storage (Google Workspace), basic Accounting/Invoicing software (e.g., QuickBooks or Zoho Books).₹4,000$50 Misc. / Buffer CapitalProfessional accountant/CA monthly retainer, office tea/coffee, traveling, and emergency client entertainment funds.₹15,000$180 TOTAL MONTHLY EXPENSESYour minimum monthly cash burn rate₹2,61,500$3,080 💡 Financial Runway & Sustainability Strategy ​The 6-Month Runway Rule: Because standard corporate B2B payment terms usually range between 30 to 90 days after a candidate joins, your agency will likely experience a cash-flow lag in its first few months. It is highly recommended to keep at least ₹15,00,000 ($18,000) in working capital reserves to comfortably cover your monthly burn rate while waiting for invoices to clear. ​The Break-Even Metric: Assuming a standard placement fee of 8.33% (1 month's salary) on a candidate with a moderate annual salary of ₹6,00,000 ($7,000), your fee per placement is roughly ₹50,000 ($600). To cover your minimum monthly running cost of ₹2,61,500, your 4-person consulting team must successfully close a minimum of 5 to 6 mid-level placements every month. Any closures beyond this threshold represent direct profit margins for the agency.

Starting a contract labor supply company involves navigating a rigorous landscape of business setup, social security mandates, and strict labor law regulations. In this industry, non-compliance can lead to immediate blacklisting by B2B clients, severe financial penalties, or legal action. ​The complete chronological roadmap covers everything required to establish and run a compliant labor supply firm. ​🛠️ Phase 1: Corporate & Base Tax Infrastructure ​Before approaching the labor department, your business entity must be legally recognized and tax-compliant. ​Business Incorporation: Register as a Private Limited Company or a Limited Liability Partnership (LLP). Most corporate clients completely restrict onboarding sole proprietorships due to liability constraints. ​PAN & TAN Allocation: Obtain a permanent account number (PAN) and Tax Deduction and Collection Account Number (TAN) for corporate income tax and TDS deductions on employee salaries. ​GST Registration: Mandatory for service providers. Manpower supply services generally attract standard GST rates, which must be clearly invoiced to clients. ​Shop & Establishment Act Registration: Register your physical corporate office space with your respective state's labor department website. ​📋 Phase 2: Core Social Security Registrations ​Providing contract labor means you act as the immediate employer of record for social security benefits. You must set up these portals before deploying staff: ​EPF Registration (Employees' Provident Fund): Statutory requirement if you employ 20 or more individuals. You will need to remit the employer’s share and file Electronic Challan-cum-Returns (ECR) monthly. ​ESIC Registration (Employees' State Insurance): Statutory health insurance mandatory if you employ 10 or more workers (in most states) earning under the threshold limit. ​Professional Tax (PT) Registration: State-level registration required to deduct and deposit professional tax from employees' monthly wages. ​Labor Welfare Fund (LWF): State-specific board registration to contribute microscopic monthly welfare fees per worker. ​🚀 Phase 3: Step-by-Step CLRA Licensing ​The Contract Labour (Regulation & Abolition) Act, 1970 (CLRA) governs your core business. You must secure a specific labor license for every individual client location where you deploy 20 or more contract workers (note: some states have revised this threshold). Secure a Commercial Contract & Work Order Step 1 Finalize your B2B agreement with the client company. You must obtain a formal Work Order detailing the exact scope of work, duration, and maximum worker deployment numbers. 2 Obtain Form V from the Principal Employer Step 2 The client (the Principal Employer) must hold a valid Registration Certificate (RC) under Section 7 of the CLRA. They will issue you a Form V (Certificate of Employment), which formally states that they have hired your agency as a licensed contractor. Submit Form IV Application Step 3 Log into the state or central labor portal (like the Shram Suvidha or state-specific e-labor boards). Fill out Form IV (Application for License) and upload your PAN, Aadhaar, GST, the Work Order, and the signed Form V. 4 Pay Fees & Security Deposit Step 4 Pay the state license processing fee along with a refundable security deposit per worker via the government's e-challan system. The total fee adjusts scalingly based on the maximum number of laborers you intend to supply. 🗓️ Phase 4: Ongoing Compliance & Record Maintenance ​Once operational, labor inspectors can conduct surprise audits. You are legally mandated to keep the following files updated: ​Statutory Registers to Maintain (Physical or Digital) ​Form XIII: Register of Workmen Employed by Contractor. ​Form XVI: Register of Wages (tracking basic, allowances, deductions). ​Form XVII: Muster Roll (Daily attendance logs). ​Form XIX: Individual Wage Slips (must be issued to workers prior to payday). ​Strict Operational Timelines ​Wage Disbursement: Salaries must be paid on or before the 7th of every month. Payments should clear digitally through bank transfers to maintain clean audit trails. ​EPF & ESIC Deposits: Monthly contributions must be calculated, filed, and paid online by the 15th of the succeeding month. ​Half-Yearly Returns: Contractors must submit Form XXIV returns to the regional Licensing Officer twice a year, proving compliance with working hours, safety, and wage standards.