2 in 3 SMEs claim cost of managing employee benefits outweighs the actual value
Facebook Twitter google+ RSS Feed

2 in 3 SMEs claim cost of managing employee benefits outweighs the actual value

By SiliconIndia   |   Tuesday, 07 August 2018, 12:48 Hrs
30
cmt right
27
Comment Right
36
cmt right
11
cmt right
Printer Print Email Email


According to a recent study two out of every three Small & Medium Sized Enterprises (SMEs) in India feel that the cost of running an employee benefit programme such as reimbursements for fuel, phone bills etc. outweighs the actual value of the benefit.



The Zeta Employee Benefits Study* commissioned to Nielsen India, which covers 194 corporates and 1233 employees across seven key cities in India, takes a comprehensive look into the current state of employee tax benefits across industries including SMEs. The survey further states that high costs of administering these benefits is the primary reason for discontinuation of reimbursement programmes for many SMEs.



Employee tax benefits or reimbursements claims are tax saving benefits offered by companies to salaried employees as part of their salary package. These include reimbursements for fuel, mobile/ internet usage, LTA, gift vouchers, meal vouchers and so on. The SMEs in the survey refer to companies with an employee size of less than 500.



Ground Reality



According to the report, 82 percent of SMEs have a dedicated team in-house to manage tax benefits or reimbursements and the average size for this team is around five members. Despite having a dedicated team, 43 percent SMEs have discontinued at least one or more of these benefits citing high running costs.  This figure is higher for SMEs as compared to large and medium sized companies with employee size upwards of 500.



An overwhelming 91 percent SMEs continue to depend fully or partially on a paper-based process when it comes to processing reimbursement for employees. The process typically requires employees to fill in claim forms either physically or digitally and submit these along with paper bills as proofs of spends for the said benefit.  Given the high reliance on a paper process, it comes as no surprise that most SMEs claim to struggle with the paper work with 46 percent citing invalid or illegible bills submitted as the largest concern while handling reimbursements, followed by problems like bill verification (18 percent) and bill storage (14 percent).  Bills submitted need to be verified for processing the reimbursement and stored for audit purposes for a period of seven years. 



Sharing his thoughts, Mr. Bhavin Turakhia, CEO & Co-founder, Zeta said, “The SME sector is the backbone of the Indian Economy. The sector contributes to around 45 per cent of India’s GDP and employs the second largest workforce in the country. In spite of witnessing tremendous growth over the past few years, the sector continues to struggle in areas of digitisation, innovation and hiring and retaining the right talent.  We have found that only nine percent SMEs use digital process to handle reimbursements. Automation is critical for these companies as it will help them reduce costs significantly and enable them t offer more lucrative benefits to employees.” 



Employee side of the story



The report shows, that 61 percent employees do not opt for these benefits because they find the process of claim submission time-consuming given that the average time taken by employees to fill a single claim is 24 minutes. Moreover, one in every two employee prefers to opt out of these benefits for a perceived higher in-hand salary. This highlights the amount of productive time wasted in mundane tasks in the absence of automation and the lack of employee education on tax saving possibilities.  



“88 percent employees from the SME sector prefer digital claims over a paper-based process. With India changing gears to become a more digitally-driven nation, the way we run our organisations also needs to change” said Ramki Gaddipati, CTO & Co-founder Zeta. “When the majority workforce prefers and has access to automation, then there’s no good reason why SMEs shouldn’t embrace it. Most importantly, a digital transition will ensure faster processes, significant cost savings for companies and transparent functioning” he added



Read more news:

Airtel ties up with Telecom Egypt for global submarine cable systems




Write your comment now
Submit Reset
SPOTLIGHT