Designing a Salary Structure for the BPO Industry: Expert Guidance and Tips

Dear Seniors,

I am Nisha Balasubramanian, working as a Senior Officer in HR. As the financial year is beginning, my bosses want me to devise a salary structure keeping the current budget in mind. We are in the BPO industry (Medical Transcription) in Mumbai, and in the past, I have never devised any such salary breakup. Please help.

Hi!

I think you need professional help. The design of a salary structure is a critical dimension in an organization. It must be designed by experts based on the following compensation principles: internal equity, external competitiveness, company affordability (budget), and company sustainability (long-term resources).

If you have a budget, please contact us through this email address or through the following numbers: 0632-7768537 (landline) or 063-916-762-7218 (mobile).

Visit my site for some information on Job Evaluation and Design of Salary Structure.

Best wishes,

Ed Llarena, Jr. Managing Partner Emilla Consulting

Hi Nisha,

I am Nisha Balasubramanian, working as a Senior Officer in HR. As the financial year is beginning, my bosses want me to devise a salary structure keeping the current budget in mind. We are in the BPO industry (Medical Transcription) in Bombay, and in the past, I have never devised any such salary breakup.

Please help.

Hey, don't panic. If you do, you would find it difficult to do this task.

If you ask me frankly, it's not difficult at all. There are a couple of things you need to do:

A. The basic structure of compensation: It's available on this site with detailed breakdowns, and I am pasting it below.

The monthly payroll:

- Basic Salary
- HRA (50% of Basic for 4 major cities & 40% for other cities)
- Conveyance allowance Rs 800/pm (excess would be taxed)
- Annuals given as reimbursement
- Commissions/Incentives
- Bonus
- Child Education Allowance (better given as reimbursement to save tax)
- Child Hostel Allowance (better given as reimbursement to save tax)
- City Compensatory Allowance
- Leave Travel Allowance (same as basic allowance or two times for the senior cadre - encashable only once in two years to save tax with supportings as per the income tax)
- Lunch Allowance
- Medical reimbursement to a maximum of 15,000/ (otherwise it will go in tax and to be given on a pro-rata basis on submission of bills)
- Newspaper allowance (better given as reimbursement to save tax)
- Special Allowance
- Gift voucher
- Club membership (save tax)
- Uniform Maintenance
- Professional Enrichment Allowance
- Entertainment (Reimbursement) etc.,
- Vehicle Allowance
- Phone Allowance
- Fuel Allowance (Petrol/Diesel)
- Driver's Allowance
- Mobile/Cell Phone Allowance
- Internet Access Allowance
- Academic/Professional Membership Allowance
- Night Shift Allowance

So pick and choose the ones which are suitable for your organization. The recent issue of FBTs would be clarified by the Finance Minister in Apr '04.

B. Decide the bandwidth of the base salary - which is the starting point for different categories. For instance, one may decide that the senior management cadre would have a base salary of 40k to 60k p.m. depending on grades.

C. Decide the allowances you would give for each bandwidth - because this has tax implications and you have to strike a balance to attract talent. For instance, give a vehicle allowance to senior management as they would have cars, and it levies a tax of 10% as it has to have an arms-length distance transaction and lease agreement in place, etc.

D. Use an Excel sheet to link these breakups.

E. Lastly, suggest reading up on the Income Tax Act regarding salaries.

Voila! It's ready.

Hope this helps.

Cheerio,

Rajat Joshi

I agree with Ed on this, although you can design a salary structure, in order to arrive at the figures, you should seek professional help.