It is easier now to start a new business

The World Bank has decided to stop publishing the “Ease of Doing Business” and “Ease of Starting Business” reports from this year. The last report on Ease of Starting Business ranks India at 136th position in 2020. While India could improve further, my experience in setting up an IT company back in 2009 and now in 2021 throws some interesting perspective on the changes.

Ease of setting up business: The Company name approval is the first step for registering a business. The process of name approval used to take 15-20 days back in 2009, now it just takes one day. Back in 2009, the name approval was handled by the state government’s Registrar of Companies (ROC), while now it is centralised.

A major improvement is the existence of a single-window during the company incorporation. This allows for Provident Fund, Professional Tax, ESI, PAN and TAN accounts to be created instantly at the time of incorporation.

Unlike earlier, there is a greater emphasis on self-governance and self-certification with higher penal provisions. The accounting and labour compliances have been simplified now (based on the Companies Act, 2013) as against the Companies Act 1956 used as the basis in 2009. Labour laws have seen improvement with PF, ESI, Shops and Establishment Act provisions going completely online. The new Labour Code is expected to further simplify compliances.

Thanks to the Digital India initiatives, video KYC and online application completely removes the need to visit any government office for the whole incorporation process. Is that not wonderful? Company incorporation used to take three months back in 2009 and now it is just about 4-5 days.

Can the turnaround time be further improved? Certainly possible. If we benchmark against New Zealand, where business incorporation takes just half a day, that would be a boon.

Unlike in 2009, nowadays the moment the company is incorporated, non-stop unsolicited calls and emails from at least a dozen private banks follow.

The banks are aggressive in selling why they are the best compared to the competition. Interestingly, the public sector banks don’t figure in this. It is unclear as to how the banks gain access to the contact details. In any case, this experience is certainly not desirable.

Infrastructure and “anything” as a service ecosystem: The communication infrastructure has seen significant improvement with 5-10 Mbps speed being premium back in 2009, while now 500 Mpbs is a norm for corporate usage. The other big difference is the type of physical infrastructure.

Unlike earlier, now anything that a business would need is available as a service. This helps the company to focus on core activities while all the non-core/ hygiene activities can be outsourced. For any company setting up operations in India, managing physical infrastructure would be a major task – this includes the building, security, facilities management among others.

“Workspace as a service” is the one-stop solution for this. Managed workspace or co-working space has gained popularity as they offer attractive options with flexibility. Similarly, several companies offer HR as a service, recruitment as a service, finance/compliance as a service. This ecosystem provides a great impetus and encouragement for new companies to be established.

Attracting talent has become tougher: With the IT industry in India doubling over the past 12 years and several MNCs setting their shop in the country, this has meant that the techies have no dearth of options to pick the “right” opportunity.

A recent report from staffing firm Xpheno states that several most Indian IT companies have registered an annual net headcount growth of 15-25% over the past five years.

The report also states that 900+ tech startups have received over $27 billion in funding and the spend on tech talent is at an all-time high. In addition, expansion hiring from existing tech companies has spurred demand for tech talent. On the talent supply side, there is a surge in job seekers now as most job seekers avoided job change last year due to the pandemic.

We are witnessing nothing less than a war for talent and it is indeed a job seekers’ market. Companies are offering huge salaries, perks like Employee Stock Options (ESOPs), joining bonuses, flexibility to work from anywhere, and even fancy titles to name a few.

Most candidates have 2-3 offers in hand and are constantly looking for “better” options. The current demand-supply mismatch could make India become uncompetitive and some work may move to low-cost countries.

However, no other country can supply 3 lakh fresh engineering graduates in software and related disciplines. Notwithstanding the current challenges, India would continue to be the prime destination for technology companies as the sheer size of the talent available in the country is unprecedented and hard for other countries to match.

Summing up, the ease of setting up a new business has significantly improved over the past 12 years. The ecosystem for supporting new companies to establish their operations has also been a great positive change.

Talent acquisition has become tougher compared to 2009 due to significant demand-supply mismatch, but then India still accounts for the largest pool of highly skilled technology talent in the world. New technology companies will continue to find India attractive!

(The writer is an Information and Communications Technology professional based in Bengaluru)

Check out the latest videos from DH: