NEW DELHI: Looking for a cost-effective strategy to comply with statutory requirements an increasing number of companies are outsourcing compliance services to third parties.
The trend of 'statutory compliance outsourcing services' is gaining momentum across sectors, especially with authorities keeping an eagle's eye on statutory compliance requirements.
The outsourcing market of such services, estimated to be worth about Rs 350 crore, is expected to grow further in the coming years, according to experts.
"Compliance services outsourcing has become a life saving element for companies across industries," staffing firm TeamLease Services Senior Vice President (Regulatory) Amitava Ghosh told PTI.
TeamLease offers these services -- related to labour -- to many clients, including " Dell, ITC Kolkata, Shoppers Stop and Dr Reddy's", among others, he said.
With the rising number of notifications and amendments as well as increased vigil by concerned government authorities, experts felt that companies are starting to realise importance of outsourcing their statutory compliance activities.
"Transfer of liability towards statutory compliance at a reasonable cost to consultancy firms can ensure both - compliance and cost effectiveness," Ghosh noted.
The government scrutiny of companies has increased significantly, which has given a boost to statutory compliance outsourcing services, global HR services firm Ma Foi Randstad's President (Consulting, Outsourcing & Training) Rahul Goyal said.
"More number of companies are doing statutory compliance service outsourcing and are spread across sectors," he noted.
Ma Foi Randstad offers compliance services in various areas related to labour to around 150 clients nationwide.
"Compliance outsourcing market is currently worth about Rs 350 crore. It is expected to be worth Rs 500 to 600 crore in five to six years," Ghosh said.
Noting that such outsourcing is cost effective for companies, Goyal said the market for these services is expected to grow at around 20 per cent annually.
"By outsourcing compliance services, we have been able to stabilise as well as streamline this whole process. Moreover, the resolution time related to (labour) issues has come down," apparel retailer Shoppers Stop's Head (Customer Care & HR operations) B V Mallikarjun Rao said.
Shoppers Stop has outsourced its compliance services to TeamLease for nearly one-and-a-half years.
Entities having multiple offices in different regions are mainly found to be outsourcing statutory compliance services, experts said.
India's top brass should advance their year-ending parties as the average Indian salary is experiencing a colossal leap. Eight and even nine-digit salaries are now commonplace. Don't believe us? Read on
How would it feel to experience a nine-digit amount get credited to your salary account? In a country where lakhs earn Rs 80 as daily wages, a crore-plus annual salary might sound astronomical, but that's exactly how much top Indian CEOs are taking home, these days. As annual reports of listed companies trickle in and companies disclose their top management salaries for the financial year that ended on March 31, 2011, a stunning fact emerges -- until now, as many as 30 chart toppers from that list took home the envious figure.
"CEOs are responsible for the company's top-line and bottom-line growth as well the company's image in the market. Hence, they need to be compensated appropriately," feels E Balaji, MD and CEO of Ma Foi Randstad, a human resource services company. "We are talking about companies running into profits of several hundred crores. If you compare the salary of an Indian CEO with his western counterpart, you will realise that we do not get paid as handsomely."
Austerity. anyone listening?
Remember the time when our former Corporate Affairs minister Salman Khursheed asked India Inc to refrain from doling out 'vulgar' salaries to the CEOs? Does the need to cap CEO salaries still hold true? "The competition has increased such that it's important to attract good talent, and keep it," believes Sangeeta Lala, senior vice-president at TeamLease, a staffing solutions company. "There's nothing like a free lunch. Nobody pays that kind of money without getting returns on the table." Adds R Vaidyanathan, professor of Finance at Bengaluru's Indian Institute of Management (IIM), "If you are obscenely paid and have an ostentatious lifestyle, you should rethink the pay package. Self-restraint and elementary corporate dharma come into the picture too."
It's not rare to find a story in the press every year about a CEO or a company owner who takes home a massive salary even as the company tanks, workers are fired and downsizing sets in. Can the revelation of high figures disturb the company morale? "Typically, this happens for people one rung lower than the CEO," explains Lala. In a 1984 essay, management guru Peter Drucker argued that CEOs' pay had rocketed out of control and implored boards to hold CEO compensation to no more than 20 times what the rank and file made. Today, the pay has spiraled to even 300 times in certain cases, especially in the West. Will the trend reach Indian shores? Balaji says -- "When you are part of a global economy, it's obvious that a trend kicking off in New York, London or Tokyo will soon be followed here." Is HR listening?
Mr Moneybags Mukesh Ambani
The one-crore plus brigade
Mukesh Ambani: Reliance Industries' head honcho was India's top-paid executive in 2007-08 with a pay package of over Rs 44 crore, and could've stayed there had he not voluntarily freezed his salary thereon. For the latest fiscal too, his salary has stayed at a Rs 15 crore for the third time in a row. We wonder why India's richest man had to spend all that money on his uber-luxe residence Antilla. Also from RIL: Nikhil Meswani, Hital Meswani, PMS Prasad and Pawan Kumar Kapil
Others: JSW Energy's Sajjan Jindal, Raymond's Gautam Hari Singhania, ICICI Bank's Chanda Kochhar, Hindustan Construction's Ajit Gulabchand, Axis Bank's Shikha Sharma, as also Infosys' S Gopalakrishnan and S D Shibulal.
TeamLease, established in 2002 is one of the leading staffing companies in India operating out of 8 regional offices across the country.