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Mar 05, 2022
4 min read

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In 2014, the World Bank’s Ease of Doing Business Index ranked India at 142 among 190 countries. A country is ranked on the basis of its performance on 10 parameters that affect the life cycle of a business in that country. It is fairly obvious that India’s regulatory and compliance environment is complex, ambiguous and not designed to enable ease of doing business. As a result, organisations across the country require immense resources and expertise to stay compliant. The situation deteriorates exponentially as the geographical footprint of the organisation increases.

At TeamLease RegTech, we have worked closely with CXOs and compliance officers of over 1,000 legal entities in the country. Here are the top 5 reasons why organisations in India grapple with non-compliance.

1) Lack of Expertise: India’s regulatory universe consists of 1,536 laws involving 69,233 compliances that span across the union, state and municipal governments. Staying compliant requires a convergence of expertise, processes and technology. A typical Indian organisation does not have in-house expertise, lacks processes that cut across many different functions and departments and largely operates in a manually intensive environment. As high as 90% of the organisations in India do not have a comprehensive list of all applicable laws and compliances. There is a general lack of awareness about the operational, financial and reputational costs of poor compliance.

 

2) Lack of Resources: Most organisations in India have an internal team of no more than 2-3 people dedicated to compliance management. In mid-sized organisations, this number stands at just 1-2 people. In a majority of cases, the team is constituted of company secretaries and lawyers, who play the additional role of organisational compliance. Since the responsibility for compliance is scattered across the organisation, it results in a lack of coordination, duplication of efforts, and increased risk of non-compliance.

 

3) Lack of Awareness at Management Level: In over 80% of cases, we find that key managerial personnel such as Directors, Board Members and CXOs have a poor understanding of organisational compliances and their respective roles towards compliance management. Resultantly, they are unable to set the right tone at the top and provide the required supervision to their staff.  Hence, compliance discussions end up being uncomfortable and typically take a back seat in boardrooms.

 

4) Lack of Access to Timely Legal Updates: India’s regulatory environment is highly dynamic, which adds to the compliance uncertainty. In 2021, there were 3,577 regulatory changes, translating to roughly 10 regulatory changes per day. These regulatory changes are published on over 2,000 government websites. They often pertain to crucial changes in procedures, dates, penalties, calculations and applicable duties, among others. There is no simple way for a typical organisation to obtain the relevant compliance notifications.

 

5) Lack of Digitisation in Compliance Tracking and Management: Over 95% Indian organisations operate at the C&C 1.0 level, i.e, ad-hoc, paper-based and people dependent. They manage compliance status in spreadsheets and use emails and phone calls for following up. There is a lack of transparency, accountability, timeliness and ownership. This leads to frequent instances of missed compliances and the consequent fallout of statutory notices and penalties. As a result, key managerial personnel are often seen operating under stress and fire fighting mode.

It is time the industry readies itself to embrace the power of digitisation and migrate to the C&C 2.0 framework of predictable, process-oriented and digital compliance management. Digitisation presents a huge opportunity for an organisation to bring improvements in its compliance efficiency, productivity and control, allowing it to scale its operations.

 

TeamLease RegTech is India’s leading digital compliance platform. It packs the power of web, mobile, analytics and cloud in a multi-tenant SaaS model. The compliance officers are enabled with real-time dashboards, empowering them with a comprehensive view of the status of compliance based risks, categories, entities and geographies. This enables them to make appropriate interventions to contain risks arising out of non-compliance. Essentially, it leads to a shift towards greater accountability and transparency and enables the management to provide more efficient compliance processes.




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