How hard can paying salaries be if a company is in good health?
Turns out it is quite the task. And most small companies simply rely on Excel gods to finish it.
The reason? There are hardly any payroll management solutions for companies with a headcount only in the dozens. Without a payroll service, founders have to either manually transfer the salaries themselves or hire an accountant or a human resources (HR) executive - an additional cost centre.
In fact, according to an industry estimate, less than 1% of India’s 63 million micro, small, and medium enterprises (MSMEs) currently use payroll management software.
Payment aggregator Razorpay spotted an opportunity in this space and added payroll management services to its neo-banking platform RazorpayX. In fact, it has already begun contributing significantly to its top line.
The fintech startup needs this to reduce its reliance on the low-margin payments business. Moreover, it has some advantages that other HR tech companies don't.
“It’s very difficult for us to get into financial services, primarily because it requires a working relationship with a bank. It’s easier for someone like Razorpay to get into providing HR tech than it is for us to get into fintech,” said an executive from a rival HR tech firm who didn’t want to comment publicly on a competitor.
Further, rivals like Zoho, for example, require companies to have a minimum headcount of 20 to sign up for their standalone payroll services.
Interestingly, Razorpay is going in the opposite direction as it wants to offer its payroll services only to tech-focussed startups that have a headcount of fewer than 250 employees.
How does this square off against its need for a higher contribution from this offering? www.multimediastudio.net
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