Outsourcing the payroll service can relieve a business of some in-house head pain, but according to a study by BPO analysts Nelson Hall, the number one reason for outsourcing payroll continues to be cost decrease, with about 85% of respondents citing this as their main business goal. On the list of countless other questions that surround payroll outsourcing (and by proxy outsourced payroll), given this statistic, one major query that is asked again and again is whether an outsourcing strategy can, in fact, deliver promised personal savings. Specifically, what
To treatment this, as well as perhaps reveal some of a lot more nuanced factors associated with payroll outsourcing, this post tries to showcase the major areas of influence that can drive payroll cost reductions.
#1: Size Is important
Some years ago, an article in HRWorld mag stated, “Big businesses can afford to keep big payroll departments. For a start-up, however, an in-house payroll service is a money burner”. While an interesting notion to be sure, the current state of affairs is in a way that irrespective of organisational size, payroll costs can be prohibitive.
The question is to what extent?
- As the fine print within the abovementioned PwC record says, outsourcing offers cost savings that become a lot more significant the bigger the business becomes.
- More specifically, the price differential between companies that outsourced payroll versus those using in-house payroll was 9% for mid-size organisations (100-1,000 employees) rising to an impressive 27% for much larger organisations (1,000+ employees).
#2: Comprehensive Outsourcing
Jumping faraway from our previous point (and following a “bigger is cheaper” debate of scale), it is prudent to explore further the scope to which outsourcing other HR functions in addition to payroll services will leverage savings.
As the PwC record notes, “For quite some time, the HR community has suspected that built-in payroll, workforce administration, time and presence and health insurance and welfare functions cost less to manage than split point solutions”.
Payroll Outsourcing Cost Factor #3: Deployment Model
For organisations managing payroll services in-house, the current trend for payroll software deployed via the SaaS (software-as-a-service) model offers its cost benefits and flexibility. While the PwC report does not deny these SaaS advantages, it did take the chance to take a look at the SaaS methodology in the framework of outsourced services.
More specifically, the survey stated, “It is clear that while SaaS can reduce a mid-size organisation’s total services costs over a premise-based or traditional software model, agencies are outsourcing process functions such as payroll. Still demonstrate additional cost savings over institutions leveraging a SaaS model”.
Usually,the real cost ofpayrollis obscured with organisations failing woefully to take into account various hidden and labour costs, or when reading analyst records failing to read the finer print. Although payroll outsourcing and other functions may not be the right option for all organisations, PwC’s research has delivered a compelling report that uncovered a bunch of cost benefits associated with the outsourced model.
While available to groups of all sizes, these efficiencies appear mainly available to larger organisations prepared to adopt the payroll outsourcing more broadly than the just the payroll services alone by leverage additional savings through designed services check payrollserviceaustralia.com.au.… [Read the rest]