Why HR Process Automation is Important for SMEs to Survive and Thrive

In India, the small and medium enterprise (SME) sector forms not only the economic backbone, but also generates significant employment opportunities across the country’s urban and rural landscape. Together with microenterprises, this sector comprises around 63.4 million units and is responsible for 33.4 percent of India’s total manufacturing output. However, despite many initiatives taken by the Government of India to transform this burgeoning sector, many SMEs are yet to embrace automation in various aspects of their functioning, especially across Human Resources (HR)-related processes. Vital for driving business excellence, HR process automation provides SME entrepreneurs with opportunities to optimize employee productivity, improve engagement and develop their businesses to compete with world-class standards.

Traditionally, most SMEs rely on manual methods to deal with important functions such as attendance, leave and payroll management, burdening them with lengthy paperwork and long lead times, thereby widening the scope of errors that could creep in due to subjective evaluations. In this aspect, a Human Resources Management Software (HRMS) can bring about increased efficiency in employee management, by automating repetitive tasks, and improved employee satisfaction by virtue of the increased transparency of operations. Additionally, by reducing the manpower needed to run these HR aspects, SMEs can focus on utilizing their employees to perform high-value work, thereby improving productivity and positively impacting their overall profitability.

By capturing all employee data through an HRMS, SMEs can better manage the entire employee lifecycle and even enable a pleasant onboarding experience for new recruits. Reviewing workflows, managing appraisals, and even tracking employee assets can become a breezy affair, while business owners can gain additional insights from customized HR dashboards to better manage their employee set.

Despite the various benefits unlocked by automating HR

processes, most SMEs remain reluctant to embrace automation due to a variety of factors. While a general lack of awareness is slowly becoming less of an impediment, most SME entrepreneurs are daunted by the potential cost of employing such advanced software. However, a slew of platforms that automate HR processes and empower such organizations with advanced capabilities, such as employee self-service, is revolutionizing this space. They also offer starter plans that effectively carry no extra cost for firms with a limited employee base. What’s more, these new-age HR management platforms provide cost-effective options with a range of functionality, features and reporting, with a per-employee cost starting from as low as INR 25/month. In addition to the aspects discussed above, SMEs can access additional functionalities such as creating customized task lists, having their own employee portal with organization-specific information dissemination, and even managing expense claims by picking the plan best suited for their requirements.

it is pertinent for India’s SME sector to stay in tune with the times and transition to automated HR processing at the earliest

In addition to the immediate benefit of increased productivity and improved employee engagement, SMEs can build a database of training records and manage sensitive operations, such as employee offboarding, a lot better with an HRMS. They could also leverage the technological prowess offered by such software to make many HR functions accessible through the cloud and enable employees to access all features through their personal computing devices. They could also leverage the data set on offer to schedule employee shifts as per the applied leave so that business operation continuity can be managed peerlessly even in extreme situations, requiring restricted working, as was mandated during the COVID pandemic. This becomes even more important for SMEs that employ a hybrid workforce and can be crucial to managing employees and ensuring they remain motivated and committed to the organization’s goals.

While the Indian HR technology market has reached a size of $850 million in 2021, there is a huge potential for expansion. But it depends on how SMEs incorporate HR process automation to drive further efficiencies in all aspects of their businesses. With the future of work having changed significantly post the COVID pandemic, it is pertinent for India’s SME sector to stay in tune with the times and transition to automated HR processing at the earliest.