Thaindian News

Chennai, Aug 19(IANS) The pan-India expansion of telecom, insurance, banking and financial services companies and the near extinction of the tribe of personnel managers have resulted in booming business for labour laws compliance outsourcing units.
“It is an opportunity that has arisen out of an Indian tragedy - the tragedy of having to deal with multitude of labour laws by human resources (HR) managers of companies with pan-India presence,” Manish Sabharwal, chairman of TeamLease Services, told IANS.

Earlier, the personnel managers were entrusted with the task of labour law compliance, said Bharath Krishna Sankar, chairman and managing director of Aparajitha Corporate Services (P) Ltd.

“With HR managers grappling with tasks like employee retention, remuneration and other measures to increase productivity and employee satisfaction they find routine legal compliance activities as non-core functions and can be outsourced,” Sankar told IANS.

He said with competition increasing, companies are forced to have a pan-India presence. But the problem is complying with various local laws, either by appointing a dedicated person or getting it outsourced to domain experts.

Aparajitha is the largest stand-alone labour law compliance services outfit with a pan-India presence and boasts of the who’s who of Indian corporate world on its client’s list.

Spread out in nearly 20 locations, the Rs.130-crore revenue company has around 400 employees deployed in this space.

Sankar said a non-manufacturing establishment with pan-India branch offices have to comply with more than 15 labour laws. Failure to comply with labour laws will result in one of company’s director’s landing in jail.

Further, most of the labour laws are antiquated and the dictum ignorantia legis non exusat (ignorance of the law is no excuse) is the sword that dangles dangerously over businesses.

“Outsourcing is definitely a cheaper option for corporates. We can complete the task at nearly 60 percent of the cost that a company would incur on its own,” N.Hariharan, head of Compliance Services at TalentPro India, told IANS.

Meanwhile, the field, dominated largely by unorganised regional players, is now attracting staffing solutions companies like TeamLease.

“We will be formally launching our regulatory compliance services in two months’ time. What we have been doing for our staff is being extended as a service to others. A cost centre has now turned into a revenue generator,” Sabharwal said.

Staffing solutions companies like TeamLease and TalentPro are trying to leverage their existing corporate relationship for this line of activity.

On the other hand, Aparajitha, which started as a regulatory compliance services company, is offering staffing solutions to its clients, said Sankar.

All the players agree that scaling up the operations by expanding to newer cities is a big challenge and at times acts as an entry barrier for others.

“Tying up with consultants or other smaller players to service a client is a big no as it involves sharing of critical data,” P.S. Srikumar, vice president (Sales and Marketing), TalentPro, told IANS.

“With competition increasing in the traditional regulatory compliance services space, we are now looking at the growing mining, energy and hospitality sectors for our services,” said K.Nagaraj, joint managing director of Aparajitha.

According to Sankar, the company is also studying markets like Sri Lanka and Bangladesh whose labour laws are similar to Indian legislation.

(Venkatachari Jagannathan can be contacted at v.jagannathan@ians.in)