In FY24, the RBI’s monetary penalties for failure to comply with regulations increased from ₹40.39 crore to ₹86.1 crore, more than doubling year-to-year.
Compliance becomes even more important for HR professionals, who have to balance the regulatory side of their work with the more empathetic aspects. Being compliant with applicable laws, regulations, and policies is not always easy.
Evolving workplace practices and technologies, along with increasing company size, mean that accuracy and efficiency are crucial for compliance, particularly in maintaining employee-related data.
Why Compliance Tools Matter
As an HR professional, compliance is important not just for avoiding legal trouble. With modern compliance tools, HR professionals can balance the practical and ethical sides of the compliance process.
The manual process of compliance can have severe consequences not only for the company’s finances but also for its reputation.
- Avoiding Legal Repercussions: The primary reason for using compliance tools is to avoid legal repercussions arising from human error or lack of experience.
- Ensuring Employee Rights: Compliance is not just about a company and the law, but also about the policies that benefit employees. Utilising compliance tools ensures that HR can help facilitate all the benefits they are entitled to through proper documentation and information.
- Company Brand: Any company that finds itself in the midst of a scandal due to missed paperwork might not only lose the trust of its clients but also make future employees reluctant to join its workforce.
- Accessible Information: Thanks to modern compliance tools, companies and regulatory bodies can securely access information and ensure that every piece of crucial employee data is stored without the fear of it getting lost. With cloud-based storage among other features, compliance tools ensure that any information once submitted to the company does not get lost due to manual/human error.
Where Technology Steps In
Though a seemingly simple word, compliance includes a wide range of tasks and responsibilities. For HR professionals, this means not only organising and safeguarding employee data, but also making sure that they are able to collect all relevant and required information.
All of the included processes need to be maintained accurately and effectively, something that modern technology can easily help with. Some of the most well-known types of compliance-enabling technologies include:
- RegTech Platforms: By automatically tracking regulatory changes and automating filings, these platforms reduce the effort needed for the administrative side of the work.
- Document/Record Management Systems: They are secure, audit-ready data stores that provide centralised access and control, making it easy and safe to store and retrieve data.
- Workflow Automation / Business Process Management Tools: These platforms enforce approval flows, escalation rules, and exception tracking to streamline the process.
- Data Protection & Privacy Management Tools: Through consent tracking, data-retention policies, breach-notification workflows, these platforms safeguard the data of the employees that has been recorded for compliance purposes.
- AI & Analytics Tools: Taking compliance a step further, these tools utilise real-time monitoring, pattern detection, predictive risk scoring, and dashboarding to provide crucial insights that can help your business grow through data that might otherwise be overlooked in a dusty corner.
How Modern Tools Drive Compliance
Though they may come in many shapes, the ultimate purpose of modern compliance tools is to ensure that your company is following all required processes and has the requisite information and resources. To achieve this, modern tools undertake a variety of tasks that have increased compliance efficiency significantly over the years.
Automated Regulatory Updates
By keeping track of regulatory changes issued by relevant governmental/industrial bodies, modern compliance tools ensure that your company do not default due to a lack of knowledge.
Modern compliance tools alert relevant compliance teams to changes, reducing lag and the manual-scan burden. The speedy nature of the process also gives companies plenty of time to adjust to the new/updated norms.
Centralised Record-Keeping
Using cloud-based compliance data vaults, companies ensure that all of their licences, filings, and registers are stored and searchable, with audit logs. This means that the necessary documentation is not only easily accessible with proper authorisation but is also secure.
The easier retrieval of compliance-related information makes the audit process much smoother. Furthermore, it almost eliminates the risks associated with loss of paperwork and/or personnel information.
Predictive Risk & Audit Analytics
AI/ML tools can easily analyse past compliance performance to highlight areas of elevated risk. By analysing past incidents of late filings, vendor exceptions, and audit findings, modern tools highlight what a company should keep an eye on.
These predictive insights mean that organisations can proactively intervene rather than react to a regulator’s discovery. This not only helps them identify problem areas but also provides ample time to develop an action plan to address existing compliance-related issues.
Real-Time Monitoring Dashboards
Modern compliance tools often include dashboards that integrate data from payroll, vendor management, operations, and HR systems to give live “compliance health” metrics.
This ensures that organisations don’t feel blindsided by the metrics during audit/filing season, as they are constantly updated on changing company numbers and how those changes can shift compliance requirements.
DPDP/Privacy-Compliance Enablement
The Digital Personal Data Protection Act 2025, or DPDP Act, seeks to protect individuals’ personal data while acknowledging the need for such data for lawful purposes.
Modern compliance tools ensure that both the spirit and the letter of this law are upheld through consent management, data access logs, anonymisation, and retention/deletion policies, making them critical.
The Human-Tech Partnership
Like almost every modern tool in the workplace, it is essential to remember that compliance tools are designed to augment compliance professionals, not replace them. While these tools significantly boost efficiency and provide data security, they still require human oversight to ensure proper functioning and compliance.
Despite their vast capabilities, the human touch remains necessary to address the ethical dimensions of monitoring, privacy, and employee trust. This is especially true when it comes to handling sensitive data that an employee may be reluctant to part with.
Similarly, human intervention is necessary when regulations are ambiguous. In a country like India, which is home to a diverse population, established regulations can often fail to account for specialised circumstances.
Consider an employee who only uses their first name. For many in India, this is not out of the norm. However, modern data entry tools often make the use of a last/second name a necessity when filing even a basic form. This is where human oversight and intervention become necessary.
Best practice: Pair tech roll-out with change management, training, and a shift in compliance culture.
Implementation Roadmap for Indian Companies
So you have chosen to modernise your compliance processes and are wondering what to do next? Keep in mind that compliance, especially, requires you to consider not only efficiency but also safety. While storing data and filing forms can be done in various ways, not all methods are secure and/or accurate.
- Audit the Current Compliance Posture: Map manual tasks, risk exposures, and regulatory change points to identify areas for improvement. Note what truly needs to be automated, what should be handled with manual oversight, and what requires a combination of both.
- Prioritise Tech Investments: In a world full of options, identify what needs to be a priority for your compliance tool. Focus on high-risk areas, such as labour laws, data privacy, tax/GST, among others.
- Select Integrated Platforms: Ensure the tool you choose supports the Indian legal context, local filings, and statutory registers. Having a single platform that can perform multiple tasks is always preferred, but keep a list of priorities in mind.
- Training & Change Management: Equip your HR, legal, and operations teams to work with new dashboards/alerts. Provide proper training to ensure that they can use the selected tasks with ease. Having a highly complex platform can do more harm than good, especially in the absence of proper training.
- Set Measurable KPIs: To assess the efficiency of your compliance tools, establish measurable Key Performance Indicators (KPIs). For example, reductions in missed filings, time-to-report, audit-readiness score, and late submissions can indicate whether the platform is performing its intended purpose.
In the End…
India’s evolving workforce has led to increased scrutiny of compliance and a diverse set of regulations that companies must adhere to. Modern compliance tools enable companies to be proactive, rather than reactive.
The utilisation of data analytics, AI, and data security makes modern compliance tools an asset to their companies when used alongside effective human oversight. While these tools can indeed reduce the effort required to be compliant, it does not mean that company leaders should not be aware of just what is happening in their company and the laws/regulations they need to follow.
Similarly, a modern dashboard may provide insights, but it is ultimately up to company management to determine the next steps. Only a balance of technology, governance, and human oversight can make modern compliance tools truly successful.
