Talent war and rising costs causing Indian employers to rethink benefits strategy

• Competition for talent (65%), rising costs (38%), flexible work arrangements (37%) and focus on I&D (31%) are the top factors influencing employee benefits strategy
• Employees place greater emphasis on short- and long-term financial security, while employers focus more on risk and insurance benefits

Two-thirds of employers in India have ranked competition for talent as the top issue influencing their benefits strategy in 2023, while 38% have also ranked rising costs as the top influencing factor. That is according to the 2023 Benefits Trends survey by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company.

Figure 1: Key business issues influencing organisation’s strategy for benefits

Figure 2: Top four business issues influencing organisation’s strategy for benefits comparison

Comparing this to 2021, focus on Inclusion & Diversity (I&D) remains in the top four but competition for talent, rising costs and flexible work arrangements have emerged as more pressing issues in 2023.

Furthermore, approximately 43% of respondents expect the persistence of higher inflation and 40% expect weak business environment to impact their benefits budget.

Misalignment in employee and employer expectations

Beyond competing ambitions, employers are also challenged by misalignments between what they offer and what employees are looking for in their benefits programmes. In India, employers see risk and insurance benefits (51%), health benefits (51%) and career, training and development (43%) as the most important benefits in their portfolios. Apart from health benefits (33%), a separate survey of employees found that employees place greater emphasis on retirement plan / long-term finances (33%), financial wellbeing / short-term finances (29%) and flexible work arrangements (28%).

Figure 3: Alignment issues between employers and employees

Elevating all aspects of benefits to improve competitiveness

Employers in India have identified a need to improve all areas of their benefits strategies over the next two years to elevate employee health and wellbeing. Some of the key areas include:

• Aligning benefits portfolios with the business strategy: Indian employers have a strong desire to improve their current benefits portfolios to compete with their competitors. Close to one-third said they are looking to improve the positions of their benefits in retirement plan / long-term finances (32%), financial wellbeing / short-term finances (32%), followed by mental health support at 30%. Employers are also putting greater emphasis on diversity, equity and inclusion (DEI), with 64% planning or considering conducting a review of their inclusion and diversity benefits.

• Managing rising costs: Employers are taking more aggressive actions to manage the budgets of their benefits programmes, with 76% of Indian employers planning to improve contract terms with their vendors and 58% looking at bundling services into one package from a single vendor. 61% are also looking to secure additional funding for their benefits programmes, 60% plan to expand the use of risk financing arrangements and 49% plan to increase the employee share of cost.

• Maximising employee experience and engagement: More than half (55%) of Indian employers are planning or considering providing a single digital platform where employees can access all benefits and services. 52% are also planning or considering more tools and services to help employees choose the best options when using their benefits, while 51% are planning or considering using targeted communications to specific segments of the workforce.

• Evaluating impact of benefit programmes – Analytics and reporting: Claims-based analyses and benchmarking remain at the forefront of benefits reporting. 81% companies are planning or considering analysing claims or usage data to understand cost drivers, while 80% are planning or considering using market studies and industry-specific survey data to benchmark benefits.

Commenting on the survey findings, Vinod VK, Head of Health and Benefits, WTW India, said, “Economic factors, a tough labour market and tight budgets are compelling employers in India to rethink their benefits strategy while striking a balance between providing best in class benefits and dealing with rising costs. This comes at a time when the post-pandemic needs of employees are changing and demands for comprehensive benefit provisions continue to grow. The challenge now will be to develop a truly equitable approach that not only tailors to the individual needs of the workforce, but also ensures that the value of their investments is optimised to become cost-effective”.

“Companies should invest time to identify benefits that appeal to each cohort and create a comprehensive DEI policy to address those unique needs. Segmentation, innovation and flexibility is the need of the hour”, he added.

About the survey

The 2023 Global Benefits Trends Survey examines the future direction of an organisation’s benefits strategy, how innovative solutions are used for old and new challenges, and how employers are changing and adapting their benefits design, financing, administration and analytics.

The survey was conducted between March and April this year with responses from a total of 5,233 employers across 95 markets globally, representing 22.9 million employees. Amongst which, 1,746 employers are based in Asia Pacific, representing 4.9 million employees. In India, 364 employers took part in the survey, representing 2.1 million employees.

About WTW

At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.