Category: HR Services


Temps and Tax

Posted By:   |  Mar 10, 2014

Tax burden 300x300 Temps and Tax

And who said that Temp’s don’t earn taxable salary….. 

For payroll,  March is an exacting month.   Primarily, it is their last chance to deduct undeducted tax and remit to the IT department.  March is  a month of relief to some and agony to others.  Relief to the studious, who did their tax homework.  And invested accordingly.    And agony, to many, who will receive reduced take home pay this month.

Most of the Companies employing regulars, make sure that the tax declaration statement is followed up religiously.  However,  many of the temping companies, are not in tune  when it comes to this.   They merely inform the temps and expect them to follow up.  While over 80 % of the temps do not have intranet facilities, which are given only to a few where the Principals have demanded.  It is time that many of these facilities are given to the temps feel many of the leading staffing players in the Industry.    And many of the performing sales people fall into the tax bracket, because of their earnings.

In IT Staffing,  the procedures are well laid out, considering the quantum of payout to each employee.  Help desks are provided from January onwards for employees to invest in tax related savings.  The problem comes in the mass non IT temporary staffing.  A trying time for relationship teams of temporary companies to convince clients, associates and more importantly their own internal finance teams… 

We guide people on some of the deductions that can be included in the form 16, if employer is informed….

Section (IT Act)

Deductions

Maximum deduction

Eligible in Rs.

80 C

School fees of Children Rs. 1 lakh

80 C

Principal payment on home loan Rs. 1 lakh

80 D

Medical Rs.5000/-

80DD

Expenses on Handicapped dependents Rs.50,000/-

(Rs.1 lakh in case of severe disabilities)

80DDB

Expenses incurred for specific diseases Rs.40,000/-  (Rs.60,000/- for Senior citizens)

80 E

Interest paid on educational Loan Full amount

80G

Donations to specified institutions 50 % – 100 % of the amount subject to a cap

80TTA

Interest on savings bank account Upto Rs.10,000/-

 

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India’s challenges in manufacturing sector

Posted By:   |  Feb 26, 2014

Manufacturing long term  Indias challenges in manufacturing sector Manufacturing GDP has to rise, if the Economy has to improve – long term . The manufacturing sector’s outlook will largely influence the job scenario.

http://indianexpress.com/article/business/banking-and-finance/job-target-now-hinges-on-manufacturing/

There has not been any significant job additions in the manufacturing sector .   The job additions were more in the informal sector.    The challenge is to make the National Manufacturing Policy into a workable framework and then re look at the skills development initiatives.

If India plans to create 100 million jobs over the next decade,  it has to have a very practical orientation to understand where these jobs are going to come from.   Else it is a tall talk, in the dark and as usual.

Not to sound cynical, however, there seems to be an absolute lack of focus.  The problem is on aligning initiatives in the Government and Private Sectors.   With about Rs.1000 crores to be additionally invested into the NSDC,  the question still remains on whether the current job training is translating to actual jobs.   Just looking at the statistics that from August 2013 around 168,043 youth enrolled into NSDC and related programs.  Around 78,000 completed training.    24 sector skill councils , 442 training partners and 17 assessment agencies are part of this program.  At the NSDC partner’s meet at Chennai recently,  Mr. Ramadorai, the NSDC head, raised questions on the data that was available to the NSDC.  The challenge for India is only compounding.

Old Labor laws -  a main deterent to the growth of the sector

The Government needs to focus on some immediate priorities to translate its actions to happenings.

The most pressing need for India is to revisit the old archic labor laws and statutory laws with a  clear time frame.   And this is something, no Government wants to touch.

Consider this.   A manufacturing Unit has to comply with 70 laws and file over 100 returns a year.   There is an urgent need to reduce this burden if the entrerprise has to focus on growth.      And without touching basics,  the government cannot just churn out training and jobs.   The entrepreneur should be encouraged to venture into manufacturing.

The industrial Disputes Act 1947 needs a comprehensive make over.  It needs to be changed to address the needs of the employer.  With present laws,  many entrepreneurs shun away setting up manufacturing facilities – which are actual indicators of a growing economy.

There is a need to revisit the statutory deductions.   A paradox, the lesser you earn the lesser you take home.  For a person with a salary of Rs.6000/- per month has a net take home which is just 52 % of his gross salary.   With poor governance of the EPF and ESIC, what is the Government trying to achieve ?

http://indianexpress.com/article/opinion/columns/a-toxic-employment-benefits-regime/

This certainly leads to informal employment of 15 persons or less.   While in China, over 80 % of garment business comes from organizations employing 200 persons and above,  in India, the same comes from organizations employing 15 persons or below.

 

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The jobs outlook : 2014 – 2015

Posted By:   |  Feb 21, 2014

No jobs 265x300 The jobs outlook : 2014 – 2015  Not to sound too pessimistic,  but the job outlook for the next six months will be slow.   With the elections and the slowing down of bureaucracy, will have its effect for at least upto December 2014.

The Automobile industry showcased a number of new releases with a cautious optimism.  The International Labor Organization’s  (ILO) Report on  global employment trends 2014 shows that the global unemployment will raise to 6.1 % in 2014.   Around 4.2 million jobs will be at stake during this period.   While unemployment rate is set to decline from 2018 onwards,  the near future looks not too promising in the South Asian markets including India.

http://www.thehindubusinessline.com/features/investment-world/global-investor/bleak-jobs-outlook/article5696199.ece?homepage=true

It is a sad fact that between 2010 and 2012, jobs grew by a mere 2 % per year.

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MSME – segment of opportunities for Temporary staffing

Posted By:   |  Jan 22, 2014

MSME 300x300 MSME – segment of opportunities for Temporary staffingThe small and medium segment enterprise will fast emerge as the largest recruiter in the Country.  It is already emerging as such.   And there is a need for HR services companies to have a clear strategy to target this growing segment with a bouquet of services offering.   Predominantly in Manufacturing and specific to engineering and infrastructure, the MSME segment has already been a big consumer of HRO (HR Outsourcing Services).   Prominent amongst them are compliance services,  record maintenance,  HR advisory and incentive based recruitment services.     Many of these organizations have entrepreneurs who are professionals and have a clear vision on way forward.   Many of them have worked before turning into entrepreneurs themselves.  Well-connected  and deeply rooted, the MSME segment is a much talked about but little penetrated segment by HR Services Companies.

More jobs will come from small entrepreneurs in the next decade than from govt, large firms” says Sam Pitroda .    http://www.financialexpress.com/news/small-entrepreneurs-key-to-job-creation-pitroda/1219208

The Action for India (NGO) recently organized an event on “Building Social Innovation Ecosystems for Mega Impact” in Delhi recently.   It brought over 100 social innovators to connect with various stake holders like investors, CSR processionals, Bearcats and Government Officials.     During this meeting the role of small and medium enterprise was discussed at length in terms of the opportunities opening up in this segment.

Till now, Temporary staffing has been more focusing on the number game in India.  Though in the IT staffing, it was happier doing smaller numbers and higher margins.  And probably the MSME is now opening up.   There are various strategies that the Temp staffing companies can focus on.   It could be  a build operate and transfer module,  or it can be a recruit and on board model,  it can also be facilitating overseas professionals coming into India, and offering services and on boarding etc.,   It would be interesting for the temping industries to work on a clear road map to tap into this opportunity with a  meaningful value proposition, that is not price based but quality of service based.   Temporary staffing is very matured in most countries, but in India, it sadly remains a commoditized services with very less value adds.  There could be exceptions to this, but these exceptions are very limited and majority of the temping is in large industries and brands only and not the small companies.

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Jobs… the year that was 2013

Posted By:   |  Jan 21, 2014

JObs 300x200 Jobs…  the year that was  2013

Assocham has released its report on Hiring for 2013.   Highlights of this report

  1.  During the period January – December 2013,  5.50 lakh jobs were created.   This is a dip over the earlier period job statistics that stood at 5.52 lakhs
  2. A overwhelming 43 % of jobs were created in the IT and ITES segments, besides IT Hardware sectors.  Thereby indicating a drastic decline in the recruitment in other industry segments.
  3. Delhi ( with NCR) still commands the numero Uno position when it came to recruitments.   Bengaluru and Hyderabad take the second and third places.   Hyderabad’s growth is much to its IT & ITES growth, which beats the political uncertainty and slower growth.   And this is due to the good infrastructure and investment friendly government initiative.
  4. Much of the growth has been coming in the tier II category.   Chandigarh, Kanpur, Ranchi, Raipur,  Vizag have all clocked over 15 % growth.

http://www.deccanchronicle.com/140120/news-businesstech/article/city-sees-flat-growth-jobs

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BFSI – recruitment and temporary staffing challenges and opportunities

Posted By:   |  Jan 17, 2014

BFSI 300x199 BFSI – recruitment and temporary staffing challenges and opportunitiesThe Banking and Financial Services sector (include BPO in this segment as well) is expected to be  major job creator between 2014 and mid  2015.  With over 28 applications with the RBI for licences, that include the likes of L & T Finance,  LIC Housing, Shriram Group,  Aditya Birla, Religare,  Edelweiss,  J.M Financial  (to name a few),  the opportunities and challenges loom large to the players in this segment.

When granted licenses,  the opportunities in the new banking segment will certainly give the needed boost , to the recruitment sentiments.   New Banks will definitely be building a data base of needed people at various positions.  The focus will be on people who have stayed long in their existing banks, which will prove that they have worked upwards.   There is also a list of people from India, now overseas, who would want to return back to India, to take advantage of the growth happening here.   However, knowledge of local markets and working experience in local markets will be the clincher in Retail Banking.  

Ratnakar Bank,  ( where the Bank is planning to increase its employee strength by an additional 1000 numbers this year) and  Axis Bank are Banks that are planning large scale expansion this year.   It is very important for Temporary Staffing (Temp staffing ) companies to come up with a list of people who have taken voluntary retirement or have opted early exists to pursue other interest.  Many of the Banks will need expertise forgo to market” strategy, which the old timers can effectively implement.   The consultant (temporary specialist) and the owned employee co existing and working towards a common goal, can be the catalyst to key growth in Banking Sector.

It is interesting that the growth of the retail segment, depends to a large extent on feet on street.   And this is a huge area of opportunity for the temporary staffing companies.   Instead of being mere “parking lots”,   Temporary staffing companies can ride this wave through innovating needs for the Banks.   Large sales teams will need administration , which means, the companies that offer a customized solution to the infrastructure, technology and training needs will stand to gain .   Banks like HDFC have built large captive companies like HBL Global, ADFC which has been largely successful to them.  One it arrests the flight of talents as these employees stand to benefit as any other regular employee would.  ICICI Bank had I Solutions and I process on lines of HDFC’s  HBL Global and ADFC.   The new Banks will have to look at this route as well.

Banks must also look out for experts who have worked on such models.   Selection of a temporary staffing agency should be on basis of their understanding of the business, and not merely on the number of “heads” a player carries in this business.

On Campus hiring, is another area of Recruitment Process Outsourcing that Banks can involve experts in.  With slack in recruitment,  many of the college pass outs are still struggling for jobs.   An effective screening followed by a training module, can help convert these raw material into valuable resources.  Many of them can be offered jobs from streams like BBA,  B.Com, M.Com etc.,  at entry level processing jobs.   And at local levels.  The Banks can embark on an all-round training module.  Small branches, with effective people have long outplaced large bank establishments.   A three member bank in a small village / district is very common these days.

Many of the NSDC partners are also training people for the Banking & Financial Services (BFSI) Sector.  And therefore there could be a positive recruitment flow from here also.   There are needs in various departments in a Banks growth.   Departments like Security handling,  administration, technology, real estate , infrastructure management,  facilities management etc., will ride this wave along with the Banks.

However, one industry that is being affected by a high attrition is the Insurance industry.  And here, it is not the top of the pyramid that is worrying them.  It is the flight of frontline staff that is hurting the insurance companies.    While a senior industry player has put the churn as close to 100 %, it is a very alarming situation.     This could be because of the low growth rate of less than 5 % in the industry (which was much touted as the sunrise industry just a few years back), or the lack of direct employer employee interactions.    The compensation offered by IT or ITES industry is comparatively better, but then the individual, needs to have clarity on where he will have a long term career plan.     This is an area where the insurance companies can work on an incentive based recruitment plan, where the staffing agency can be paid an incentive based on the longevity of the candidate in the system.

References :

http://timesofindia.indiatimes.com/business/india-business/Bank-hiring-zooms-ahead-of-new-licences/articleshow/28862334.cms

http://www.hindustantimes.com/hteducation/greatcareers/india-inc-wants-you/article1-1168051.aspx?hts0021

http://www.thehindubusinessline.com/industry-and-economy/banking/flight-of-frontline-staff-hurting-insurance-firms/article5570655.ece

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ESIC – Time to re look, time to revamp

Posted By:   |  Jan 17, 2014

ESIC 2 300x199 ESIC   Time to re look,  time to revamp    The Employer State Insurance Corporation ( ESIC) , like all other Governmental agencies, needs a massive re vamp.   The hospitals, facilities on one side, but more importantly the need to streamline the working and creating an ease for the employer & employees.   At a time , when cash less insurance and other similar services have reached a maturity,  ESIC is still far behind.

The need for one return, one remittance and one window is something that the ESIC is working towards,  it makes a lot of sense to re look at the processes involved.  The contribution, unlike the PF is a spent amount for the employee.  The need for generating a onetime permanent number for the employee, irrespective of the employer, will benefit in continuity for the employee and do away with the multiple times the documentation is done.     The ESIC can also be linked to the Adhar card or the simple ration card, if the employee is working at the place of his home town.

There is a drastic need for ESIC to hold a national communication campaign to educate the mass about the benefits and reiterate the ease of administration.   At each city,  there should be a training module for users, besides regular refreshers.

Recently the ESIC is considering increasing the salary limit from existing Rs.15,000/- a month to Rs.25,000/- a month in terms of the coverage.  This is like an income tax at the lower level of society – in terms of wage earners.

Expanding its scope will mean, that people end up paying more to the government and taking less home.   So why is the honest employee taxed – is it because , he is the most vulnerable source to be taxed ?   A business man or an non-salary earner, is far better off than salary earners –  this is an aspect that the Government should debate on.     This will not augur well for the employers and employees, who are keen on better benefits and ease of administration.  Besides, in a down turn , like what we are witnessing now,  the employer will tend to increase mechanized work at the shop floor or office, instead of hiring people, and this will slow down the economy – which is already fragile.  It is better for the ESIC to first revamp itself with a definite time frame, with a milestone, clearly marked and communicated to the key stake holders.

Key steps that the ESIC should take before expanding the scope of salary

  1.  Look inwards and stream line operations.  Simplify processes.
  2. Made compliance audits mandatory for large contributing employers.
  3. Create facilities and benefits that will draw people to con tribute
  4. Create ease of operations to ensure that every contributor can view his / her records.   A onetime registration with family photograph should be digitalized to ensure that multiple time filling of form is avoided
  5. Hold a national debate through the most accepted medium of communication to majority of stake holders and take in the views that need to be incorporated.
  6. Include key stake holders like large organizations and federations like the Indian Staffing Federation to suggest improvements.

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Retail Association of India seeks permission to allow retailers to maintain labour registers in electronic form in Maharashtra

Posted By:   |  Jan 02, 2014

As required by labour laws, all labour registers need to be maintained in physical form separately. Given the large number of employees in stores and back-end infrastructure like warehouses, it becomes difficult for retailers to maintain such registers separately in physical form.   The Retail Association of India (RAI), has submitted representation to the Labour Ministry of Maharashtra proposing that these registers be consolidated into one register which can be electronically maintained in a soft copy format as this would allow the employer to comply with such provisions in an accurate and environment-friendly manner.

maintain labour registers 300x199 Retail Association of India seeks permission to allow retailers to maintain labour registers in electronic form in Maharashtra

Please find the representation with the link :  http://www.rai.net.in/Representation_Labour_Secy_E-Documents.pdf

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Staffing in Retail – the staffing challenge and the opportunity

Posted By:   |  Jan 02, 2014

EA 300x225 Staffing in Retail – the staffing  challenge and the opportunity

Jones Lang LaSalle (JLL) one of the premier real estate consulting MNC’s has, in its recent report, indicated that the retail space in shopping malls is expected to more than double in 2014.   And this will be in the top seven cities according to the report.   About 11.7 million square feet will be the expanded size of the retail.    This poses a wonderful opportunity to temporary staffing companies.  Many companies have still note understood or worked on an attractive value proposition for retail. Retail opportunity should be understood from various stake holders’ angles.

During 2013, these 7 cities – Bangalore, Chennai, Delhi-NCR, Kolkata, Hyderabad, Mumbai and Pune – logged an estimated supply of around 5.2 million square feet, taking the total shopping mall stock to 76 million square feet (sq ft)

From a shop that will set shop in a mall,  it will be store managers,  and trained counter staff that are required.    There is a need for  cashiers and computer operators are required to ensure an immediate start for these shops.  Normally people are shifted from other malls to the new malls to ensure initial smooth sail, however, if the staffing companies come up with a  value plus proposition and tie up with the skills companies that are training,  this could be a winning formula.   Take any retailer,  his biggest challenge is the attrition and non-availability of trained resources.     The shops also include the food courts within the mall that often attract most visitors.

For a security agency,  the staffing opportunities are in terms of security staff for each shop and the mall.   Over half a million jobs have been estimated to be created under this category.    According to Mr. Rahul  Trivedi,  General Manager – Shield Securities Private Limited,  the security agencies need to comply with PASARA Act  (An act passed in the Parliament in 2010).    And clients have benefit of choosing people from such agencies.    According this Act, every security agency has to comply and procure a license  from the relevant authorities in the state in which it operates.  This Act stipulates that each of the guards  have  to undergo a training of 160 hours of structured training.    Once he completes, he gets a certificate and is eligible to be paid wages  as a skilled employee.  This has also been recognized by the national skills council and there are specific agencies that provide opportunities.

Housekeeping is yet another opportunity that comes up with these malls.  There are large organizations like Avon, Cushman & Wakefield,  CBRE ,   Frank Knight,  JLL which work on a combination of own and temped employees in this space.   Staffing companies need to work with the skills and smaller training companies to provide the manpower.

Therefore staffing companies need to ensure that they need to go beyond the value curve.  They need to customize the requirements to the needs of clients.    And they need to keep an inventory of ready to join people.   Most organizations also need blue skills like Carpenters,  Painters & plumbers.   This could be another area of opportunity.

While many of the staffing companies, including global giants pride that they have a retail practice, it is very often the small and the medium players who walk away with the cake, as they care to understand the requirements and are able to customize solutions.   It will not be long , when we find practice led staffing companies like we have in UK and advanced staffing markets, that will provide niche offering.  And that would signal the qualitative growth of staffing in India.

Ref :

http://economictimes.indiatimes.com/markets/real-estate/realty-trends/shopping-mall-space-supply-to-more-than-double-in-2014-report/articleshow/28241675.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

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Small is big in staffing ?

Posted By:   |  Dec 11, 2013

Small firms make big profit 300x179 Small is big in staffing ?      Smaller staffing firms are more profitable – this is something we get to understand by going through various research reports and actual ground  level meeting with various firms.   There could be various reasons for this.  When a company is small,  its operations are manageable.  It is closer to the client .  It understands  the client’s business and is willing to spend more time with the client.   In a way nearer the client.

However, as staffing business grows,  the transition could be a challenging time for the companies .  The need to cope with transition, without losing customer focus.   This is a time, a company can take external help from consultants, who are in tune with the business, and who can manage the customers for the Company during this transition, while the company prepares for the next phase of growth.

Recently,  I have worked with two companies during this phase.  And the insights were certainly interesting.  In one case I worked with a company on its expansion phase with a new team, without pulling out the persons near the customer during this phase.  This ensure continuity for the client and the Company’s business.

In the second case,  I worked with a  company managing the relationship with client,  and ensuring that the customer service mapping including renewals was done, while the management prepared its senior management to the next phase of growth.  Balancing is a very critical function that a  company needs to do at its growth phase.

A very critical intervention in a transition phase is to understand, map and manage the change in client environment.   It is important for the staffing company to keep in tune with the Client’s business on  a proactive manner.  To understand focus areas,  pain areas and then come up with solutions.

http://www.staffingindustry.com/site/Research-Publications/Daily-News/US-How-much-revenue-do-staffing-firms-get-from-their-top-clients-28194

This is a very interesting article that showcases the fact on a global scale.   This also focuses the need to keep clients diversified.  To make sure that there is enough business so that the largest client is not a threat.   In India, there are a number of companies, where the outsourced staffing (temporary) is over 2000 people per business.   The temporary staffing companies run the risk of client deciding to have more than one vendor, or moving to another vendor.  This happened in many cases.

In Bangalore a large garment manufacturing business of one of India’s leading Industry brands moved from one large vendor to another citing challenges in servicing.  This was a huge set back to the staffing company.   Similarly a very large agricultural complementary business is contemplating a move from its existing vendor to a new one.  The numbers are over 3000 associates.   There is a need therefore to identify Key Relationship Management and look at it as a separate business unit or brand.

The Indian market – temporary staffing has not grown significantly, though opportunities are present in plenty.  The business transits between organizations and in a way stagnant.  So the best way to secure business and make it profitable is to tune in with times, without losing sights on profitability.

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