The business banking platform of Razorpay, has derived some interesting observations from the payroll data of over 25,000 employees across 360 startups in India from 15+ sectors who currently use RazorpayX Payroll.
Payroll management is known to be among the biggest expenses that organisations incur, and the pandemic served as an inflection point for organisations, especially startups, to rethink workforce planning and management strategies. In the last two years, payroll practices of startups have gone through a sea change with the adoption of new technological interventions, which in turn has empowered and enabled business owners to focus on managing their businesses without worrying about compliance. This Insights Note by RazorpayX Payroll, the business banking platform of Razorpay, has derived some interesting observations from the payroll data of over 25,000 employees across 360 startups in India from 15+ sectors who currently use RazorpayX Payroll.
TOP 5 PAYROLL INSIGHTS FROM RAZORPAYX PAYROLL:
The report analyses in detail the various aspects of payroll in the startup ecosystem in the last 6 months i.e. from April to September 2021.
- Total salary spends increased by 43% during the period. The pandemic caused many start-ups to freeze performance appraisals and increments. However, the scenario has reversed this year, indicating a gradual movement towards a business recovery. EdTech, FinTech, and Electronics (online and offline) are some of the sectors that witnessed a significant increase in their salary spend during the last six months. Moreover, some startups even increased the median salary of their employees by 7% this year.
- In recognition of a challenging fiscal year, there’s been a 52% increase in organisations that disbursed bonuses. The amount paid out on bonuses increased by 23% during the past year as opposed to pay cuts and deferred bonuses last year. Real Estate, Hospitality and AgriTech are some of the sectors that weren’t able to give out bonuses yet since they are gradually stabilising.
- Employee headcount increased by 30% in the last six months. As businesses start to flourish, hiring has kickstarted again and is expected to only grow in the months to come. At an individual organisational level, 57% of the organisations saw an increase in hiring, and 28% saw a decrease in headcount, in the last six months. The E-commerce sector contributed to this growth in a major way, given that a lot of businesses and consumers started to embrace digital.
- During the last six months, employee headcount in entry-level roles grew by 14%. The data revealed that mid-level roles grew by 31% while mid-senior level roles saw a growth of 38%. Senior-level roles saw the highest growth of 43% in headcount across startup organisations. This could possibly indicate a need to onboard C-level leaders for rethinking business strategies.
- Reimbursements to employees increased by 50% in the last 6 months, compared to the previous 6 months. After a drop in the first couple of months, Travel reimbursements increased by 54% in the last one month as work-related travel across startups are starting to increase. Fuel reimbursements increased by 28% in the last 6 months. Further, reimbursements for internet connectivity have increased, possibly indicating continued remote and hybrid work regimes. The number of reimbursements paid in this category grew by 63% during these six months. Interestingly, food reimbursements dropped by 75% in the last six months, after a peak in March.
Shashank Kumar, CTO and Co-Founder, Razorpay said, “Businesses across industries are on the road to recovery and these insights reiterate this in many ways. The fact that the majority of our startups using RazorpayX Payroll have increased their salary spends alongside a steadily growing headcount is a clear sign of revival. While employing the right talent is critical for businesses and especially start-ups, it also means spending man-hours undertaking tedious payroll management processes without leaving any scope for errors. This continues to be one of the most challenging tasks in business finance and it is time that organizations move on from age-old manual processes and instead choose automated solutions so that they can save time, optimise operating costs and focus on business growth and employee experience.”
According to a recent industry survey, over 57% of businesses rely on manual efforts for payroll management. Today, organisations of all sizes have been forced to rethink how integrated HRM and payroll software and services could be used to increase efficiency and sustain their payroll practices. As a result, RazorpayX Payroll has seen a significant increase in adoption of payroll solutions among startups, grew by 147% during the last 6 months.
Trends, predictions for startups to look out for:
● WFH related allowances will increase – Based on the report findings on how companies have been increasing allowances, our experts at RazorpayX Payroll predict almost an 80% rise in reimbursements and allowances related to internet connections to further enable remote and hybrid work regimes.
● Contractor, freelancers and gig economy payments are on the rise among startups. Payroll software will have to extend features to accommodate this trend in terms of onboarding and managing compliances.
● There will be more Improved data security – Organisations have the responsibility to protect a huge pool of employee data like salaries, addresses, bank account details, and more. Technologies in automated payroll, today, are evolving to support organisations that protect this data by including methods like security questions.
● Insurance offerings will be on the rise – Employee health and wellbeing will continue to remain a top priority and we believe more startups will offer health insurance to cover employees and their dependents.
Source: Business World