How to start a manpower supply business in India

What does a manpower supply business actually do?

You employ staff (housekeeping, helpers, drivers, office support, loaders, security and so on) and deploy them at your clients' premises. The client pays you a monthly bill, usually per post or per staff-day. You pay the staff their wages, deposit PF and ESI, and keep the difference as your margin. The business is simple to describe and hard to run well. The money is made or lost in three places: pricing, attendance and collection.

Which registrations do you need?

Your state may also require registration of your office under its shops and establishments law, and its own rules under the Labour Codes may set different thresholds. Check both with a local CA or labour consultant before you take your first contract. The contractor licence guide covers the licence in detail.

How do you price your first contract?

Start from the minimum wage your state notifies for the category of work, skill level and zone of the client's site. Add the employer's PF, ESI and bonus on those wages, a reliever if the post runs seven days a week, uniform and other costs, and your service charge. GST goes on top. The manpower rate calculator does this in a minute, and how to calculate a rate per post explains every line.

Two mistakes sink new agencies. The first is quoting below cost to win the first client, then paying the statutory costs out of margin. The second is signing a contract with no clause to revise the rate when the minimum wage or VDA goes up. Every revision then comes out of your pocket.

How much working capital do you need?

Wages are due fast. Under the Code on Wages, 2019, monthly wages must be paid by the 7th of the next month. Client payments often arrive later than that. So you pay at least one month's wages, and the PF and ESI on them, before the first client payment arrives.

Worked example: 20 staff on ₹18,000 a month each.

If the client takes 45 days to pay, you fund a month and a half of this. Budget for it before you sign, and invoice the day the month closes, not a week later.

What do you need from each new staff member?

• Identity and address proof, and a recent photograph.
• Bank account details, so wages are paid into the account and you have proof of payment.
• Their UAN (PF number) and ESI number if they have worked in a covered job before.
• An appointment letter stating the wage, the wage period, how part months are calculated, and the site.
• For security staff, the background check and training that PSARA requires.

Enter every person in your employee register on day one. Under the 2026 central rules, registers can be kept electronically. See which registers you must keep.

Why set up attendance before the first deployment?

Every rupee you pay and bill flows from attendance: the salary sheet, the PF and ESI, the client bill and the registers. New agencies often start with a paper register at each site and a supervisor's WhatsApp messages, and month end becomes a week of reconciling. With staff who share similar names, wrong-row ticks and proxy marks creep in from the first month.

How do you bill and get paid?

1. Close attendance for each site on the last day of the month.
2. Bill staff-days × the agreed rate per category, plus any agreed overtime, plus GST. See how to bill a client for manpower.
3. Attach a staff-day summary and the attendance sheet so the client can check the bill without calling you.
4. Pay wages by the 7th of the next month, deposit PF and ESI, and keep proof. Many clients ask for these before releasing payment.
5. Follow up on the due date. A polite reminder on day one of overdue costs nothing.

Sources

• Code on Social Security, 2020, First Schedule (EPF and ESI applicability) (India Code)
• Code on Wages, 2019, section 17 (time limit for payment of wages) (India Code)
• OSH and Working Conditions (Central) Rules, 2026: licence fee table, rule 90(4) (eGazette)
• Ministry of Labour: FAQs on the OSH Code (licence threshold)
• Notification 11/2017-Central Tax (Rate): rates for services, heading 9985
• PIB, 21 Nov 2025: the four Labour Codes made effective

This guide explains the rules in plain language. It is not legal or tax advice. Laws and rates change, so check your state's rules and confirm registrations with your CA before you act on it.