The next level of optimisation for organisations to sustain their competitive advantage is their workforce, declares Sumeet Doshi, Head Marketing - India, Kronos Systems India P Ltd, Mumbai (http://bit.ly/F4TSumeetD). Workforce management solutions, he avers, will help organisations across industries to not only cut costs but also significantly improve productivity and organisational throughput. “With workforce being the greatest differentiator for any organisation, workforce management solutions will help organisations derive the greatest benefit from this resource,” is Sumeet-speak, during a recent interaction with Business Line . We continue our conversation over email.

Excerpts from the interview.

What are the common workforce leakages faced by the Indian IT industry? How different are these from global counterparts?

Unlike manufacturing, where the workforce represents a small percentage of overall operating costs and is one of the three key assets – man, material and machines – workforce in the services sector is the largest portion of operating costs and is also the key asset.

Indian IT/BPO companies are facing significant competitive pressure from other geographies as increasing labour costs create a strain on profitability. While cost advantages still exist in India, this leverage is narrowing at an aggressive pace. However, here lies the opportunity for organisations to optimise costs as the IT/BPO industry face significant payroll leakages due to a host of issues.

The overall payroll leakages due to the issues mentioned below can even reach 10 per cent of payroll costs in some cases:

One of the biggest sources of leakages in IT/BPO companies is planned and unplanned absence. Absence can account for 35 per cent of payroll. Unplanned absence of employees has a huge impact on organisations. Since the absence goes unrecorded, the leave balance does not get debited and there is an encashment impact later.

Employee attrition and absconders can also have a significant impact on payroll leakages. This is a bigger issue in the ITES industry where employee absconding rate is still quite high. It is extremely difficult to eliminate payroll leakages due to absconding by deploying manual processes.

IT/BPO companies face bloated payroll expenses due to inaccurate deployment/ scheduling of workforce which leads to aspects such as employee buffer or “bench”. While some amount of bench strength is required, inaccurate and manual planning can bloat this number and create significant strain on profitability.

Many employees in the IT/BPO companies also get variable allowances based on working duration such as overtime, and shift allowances. In most companies, this is tracked manually and can lead to significant abuse and hence leakage.

Reconciling time worked to payroll time is one other issue. Increasingly, IT companies are being asked by their customers to provide reconciled data of timesheets entered by employees to actual attendance time, and companies are finding it very difficult to reconcile as no systems exist to manage this today. This leads to erroneous calculations, which could cause potential customer issues.

While the payroll system may be automated, most IT/BPO companies have semi-automated means of collecting data relevant for payroll. This leads to manual entry errors that can be anywhere from 0.3 to 1 per cent of payroll.

On top of these, doing all the above also means the number of people required to manage the data is quite high, leading to reduced productivity and higher payroll costs.

In developed economies, the challenges exist around accurate calculation of payroll as rules related to payment based on time worked can be quite complex. Incorrect calculations not only lead to leakages but can also lead to serious compliance issues. Again, manual or semi-automated management of these processes can lead to overall payroll leakages in the range of 1-4 per cent. In India, the challenges are less around time-based payment calculations and more about other issues, as mentioned above.

How have IT enterprises been traditionally managing the problem of workforce leakages?

Overall we think that this industry can still achieve significant cost reduction and benefits by deploying real-time integrated workforce management solutions to eliminate leakages. While some of the more mature IT and ITES organisations have been able to deploy complex home-grown systems to plug these leakages, most other IT and ITES organisations do not have the real-time integrated view into their workforce that will help them eliminate these leakages.

By real-time integrated view we mean managing employees in real-time from the four key dimensions, viz. planning & scheduling, tracking presence, tracking absence, and activities. Most organisations manage the four dimensions in silos, leading to inaccurate and incomplete information. Due to the state of the systems, many organisations are not even aware of the leakages they may be having in their payroll every month.

Can you describe a smarter way to mitigate workforce leakages?

One of the foremost things to do is to deploy centralised systems across the organisation that provide a real-time integrated view of the employee from the perspective of planning & scheduling, tracking presence, tracking absence, and activities.

As an example, a large BPO organisation, after deploying Kronos Workforce Management systems, realised that the unexcused absence percentage was 10 per cent+ and the leave encashment leakage ran into hundreds of thousands of man-days every year. This, despite the fact that the organisation had a completely automated leave management system in place. The issue the organisation had was that there was no way to track if the employee had come to work if he/she has not applied for leave and vice versa – lack of real-time integrated view.

Once an integrated system was deployed, it immediately became apparent that due to lack of enough controls in place, employees would not apply for leave and go on leave, thus getting paid for being absent and also getting benefited with additional leave encashment. Deployment of a WFM system also led to other benefits such as significant reduction in payroll processing cycle, lesser employee grievances on payroll as payroll was now more accurate and better deployment as managers had a better view of employee availability and leave plans.

Would you like to highlight the potential for non-IT enterprises, from workforce management solutions?

Apart from IT and ITES organisations, industries such as retail, healthcare, manufacturing, transportation and public sector can benefit heavily from deploying workforce management solutions. These help these industries optimise their workforce on the work floor thus helping improve productivity and control costs.

In a retail and healthcare environment, it is critical to have the right person at the right time at the right place. Having the wrong person can lead to loss of sales in retail, and perhaps serious medical consequences in healthcare. Workforce management solutions help identify the right set of people with the right skills based on the forecast business workload, thus helping organisations achieve higher utilisation and improved workforce effectiveness.

The same applies to other industries such as manufacturing and transportation. Better deployment of workforce leads to improved throughput, reduction in lead times, reduced safety issues and, hence, reduced costs. Workforce management solutions also help organisations with real-time visibility into availability and un-availability of their workforce thus helping managers make better and quicker operational decisions. A shop-floor manager or a nursing manager of a hospital would love to know in real-time the availability of their employees so that alternative deployment decisions can be quickly made, if required.

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