The Hindu Business Line : More than free meals

A booklet of vouchers could not be more gratifying, especially when they are distributed free by your employer and can be exchanged for anything from a meal to groceries at the neighbourhood retailer.

What’s more, the most popular versions of these vouchers, which are also commonly referred to as employee loyalty and rewards solutions, are not taxable either at the hands of the corporate distributing them or the employee receiving the vouchers. The meal vouchers, which are the most common kind of vouchers distributed by corporates, are usually worth Rs 1,100 each month.

Susan, a single woman working in the IT sector, misses the meal vouchers her previous employer used to offer. They were a handy ‘perk’ that she could exchange for a meal at the canteen or pizza at a fast-food joint. “Since the vouchers are flexible and accepted at a range of outlets, I could even exchange them for something like toothpaste,” she says. Anil, who works in an e-learning company, uses the vouchers primarily to buy his household requirements from the neighbourhood grocery. The flexibility of the voucher and its acceptance across a variety of retail outlets make it a good value proposition for employees. It is these attributes that have seen what is essentially a B2B product become an inseparable part of the urban landscape.

Though the meal voucher is the most common kind of voucher distributed by corporates, companies also distribute gift vouchers at festival time and incentive vouchers in recognition of a good performance.

IN EXPANSION MODE

The biggest brands in this space, Accor Services and Sodexho, entered the country a decade ago. With both brands having built sizable networks of corporate clients and retail affiliates, they are now thinking expansion. India is an important market for the brands and top officials from both these French companies have visited the country in the past year.

The companies are not just planning to expand their range of products to include services such as childcare, education and literacy, but are also planning to grow their organisations, both organically and inorganically.

A Sodexho official said: “The recent visit of the Group Chairman, Pierre Bellon, and the Group CEO, Michel Landel, to India underlines the commitment of the group to India operations. The group sees India as one of the growth drivers in the region and hence will explore all opportunities to grow organically and inorganically.”

Sodexho India, a 100 per cent subsidiary of Sodexho Alliance, has also diversified into off-site management of catering facilities and housekeeping.

The company employs more than 8,500 employees (just 200 are engaged in the voucher business with the remaining in integrated facilities management) and sees itself having 20,000 employees in the next three years. Globally, Sodexho, which employs 3.32 lakh employees, recorded a turnover of €12.8 billion in 2005-06.

Accor Services has also announced its intention to consolidate its market share and double its size in the next five years. Currently present in 38 countries, it plans to set up shop in 10-15 countries in the next five years.

Accor Services India, its joint venture with Radhakrishna Hospitality in which the Indian partner holds a 25.1 per cent stake, has two flagship brands in India, namely the Ticket Restaurant Meal Voucher and the Ticket Compliments Gift Voucher.

Following the acquisition last year of Royal Images Direct Marketing Pvt Ltd, a provider of customer relationship management services in customer loyalty, channel incentives and sales force motivation, Accor has also strengthened its presence in the incentives and loyalty programmes market in India. “We have expanded, based on an organic growth plan,” said Serge Ragozin, Chief Operating Officer, Accor Services, during a visit to India last June.

The company has earmarked a total of €500 million for acquisitions worldwide, most of which has been consumed in the last one year or so.

The most recent purchase was the $15-million acquisition of Surf Gold, a marketing services company, which has a presence in Taiwan, Singapore, Hong Kong, Thailand and India.

The acquisition is expected to broaden the scope of Accor’s rewards and loyalty programmes. Accor Services, which is a part of the Accor group that owns Accor Hospitality, recorded sales of €10 billion and revenues of €760 million in the year 2006.

NEW PRODUCTS

Both Accor and Sodexho are best known for their meal vouchers in India. However, they are keen to involve themselves in social programmes such as education and literacy. Besides, they are also considering delivery of childcare and healthcare services through the medium of the voucher or card.

Sandeep Banerjee, Managing Director & CEO, Accor Services India, said: “Education is an area of priority for Indians, especially in the rural sector that will facilitate greater job creation.” As part of our social programmes, we are evaluating the role we could play in this field given that we successfully operate social programmes in other countries internationally.

“We are strong in the area of childcare, for instance, in the UK. Such businesses require the necessary support infrastructure to be implemented well. There could be opportunities in the field of preventive healthcare as well. Currently, these opportunities are under consideration. We usually work with corporates, private and public institutions in rendering our services to their employees and stakeholders.”

Sodexho is also weighing an entry into the social sector. Like Accor, Sodexho has also been providing services such as childcare and education to communities abroad.

According to an official with Sodexho, the company would consider introducing new innovative services.

This could include delivery of healthcare services, including preventive healthcare and education support through education vouchers. Besides, the company would also consider extending support services at remote sites, he said.

Clearly, these service providers are keen to keep pace with the economy. And even as these B2B companies work on their expansion plans, more and more end-users, whether they are employees, students, working moms or patients, can all hope to benefit from a range of solutions delivered by way of vouchers, and increasingly through cards.

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