Outsourcing can be a route to achieving strategic roles in your company
Outsourcing is one route that HR functions can take to achieve a more strategic and influential role within their organisations. But the decision needs to be carefully considered, as outsourcing is not a one size fits all solution. Outsourcing is essentially about getting back to basics; to the functions that really drive your business. Adding the HR function to the daily list of tasks can cause other areas of the business to be neglected. Outsourcing payroll functions saves time and frees the company up to concentrate on its core business.
Reducing costs remains a key factor in most decisions to outsource. While big businesses can afford to maintain big payroll departments, an in house payroll can be a money burner for small businesses. Payroll processing is expensive because it entails labour, assets and technology costs. A third party provider has up to date technology and economies of scale, which means that it should be able to process each payroll more cheaply than an in house department.
An added bonus is that a third party provider comes with accuracy, reliability and speed, all of
which minimise costly mistakes, variances in the quality of work delivered, and the need to hire
extra hands to meet demand. A third party provider is also responsible for keeping abreast of
legislation and other developments and to regularly train their staff to ensure they have the latest knowledge. With this expertise a company can be assured that it is complying with eh prescribed tax, labour and other laws pertaining to payroll.
Staff turnover in any function is a huge concern to a business. However, such turnover disruptions in payroll affect the timely administration and disbursement of salaries and sends wrong signals to the workforce. An outsourcer has access to qualified staff which can step in wherever necessary. With an outsource option a company will never be faced with the dilemma of the key payroll employee having walked out the door with all the relevant knowledge in tow.
If salaries are delayed or paper work is not up to scratch, it’s the payroll service provider’s responsibility to fix things, and if they can’t, the customer can take legal action or simply switch to another service provider. In an in house scenario, an HR manager could spend weeks firing, hiring, and training payroll staff in order to get the department running efficiently.
Lack of compliance in in house payroll is one of the most common complaints outsourcers hear. Moreover, the lack of regular internal audits on payroll systems to ensure compliance, and the speed at which statutory bodies notify employers of breeches, leads to unnecessary workload and costs. An outsourcer, on the other hand, has to meet service level agreements, and ensuring compliance is right at the top of their deliverables to the client.
There’s a lot to be said for the peace of mind that outsourcing payroll services can bring to a business. Fewer headaches and fewer hassles means that you are left to focus on running a profitable business.
