Operating a business means balancing all aspects of the front-end to the back-end operations. Most businesses know how to delegate their tasks to the right employees but sometimes, as the business expands, even the most successful businesses may become overwhelmed with managing so many teams at once. Some companies choose to outsource because they want to focus on what they do best and eliminate any potential administrative hiccups that could jeopardize their company’s progress.
To maintain a certain standard of service quality, top executives must decide which roles must be passed on to the right people in the business. This is how outsourcing works, it is an agreement in which one company engages the services of another to be fully responsible for a scope of work that has been previously done in-house. Sometimes, this could mean transferring resources such as assets and manpower to another company for them to run the operations efficiently for you.
On a larger scale, transferring employees under the care of another company is termed as, “Human Resource Outsourcing” and it encompasses a few other finer HR processes as well. In this article, we will cover considerations to make when deciding to outsource the payroll function.
Outsourcing Your Payroll Process
One of the most tedious administrative processes in HR is also the most popular one to outsource — payroll. When you outsource your payroll, you can expect an external specialist to handle the administrative functions of paying an employee. Research has predicted that the global payroll outsourcing market will grow at a compound annual rate of 6% from 2017 to 2021.
With technological advancements in software platforms and access to cloud computing, the services that payroll specialists can offer to clients have dramatically improved in efficiency. The payroll package you adopt should integrate seamlessly with your business infrastructure and deliver their services every pay cycle. Depending on the payroll outsourcing provider, clients can choose packages ranging from simple tax, end-to-end logging of hours clocked in, salary calculation, and the issuing of paychecks
Why it is better to outsource your payroll matters?
Payroll outsourcing is more than just a matter of making sure employees are paid on time. It is a very complex procedure to follow through and it can get very time-consuming.
Here are the 4 reasons why you should consider outsourcing your payroll:
#1 Outsourcing lets you focus on projects that add value to your business
If you think that a considerable portion of your HR’s (or Finance’s) time is spent dedicated to payroll processing every month, it is a sign that your core services are being negatively affected. As you spend more time fretting over salary matters, you are neglecting what matters more. Outsourcing your business’ payroll frees up many resources (especially time), including precious human capital. Your HR is now free to strategise planning and operations.
#2 Eliminates the risk of delayed paychecks
Neglecting payroll is also not an option because when one misses the payment deadlines, it will lead to an even bigger problem — unhappy employees. In fact, it only takes two payroll processing hiccups to provoke 49% of workers to start looking for a new job. The burden that payroll brings can lead to a knock-on effect that will lead to dire consequences in the long-run.
#3 In-house payroll can come with a hefty price tag
Abhishek Sharma, a lead analyst at Technavio, “Establishing an efficient and streamlined payroll system within an organisation requires a high upfront investment. Therefore, companies are outsourcing payroll services to focus on their core product offerings and remain competitive in the market.” In-house payroll systems incur relatively higher costs for hiring employees and adopting state-of-the-art technologies.
Companies that provide payroll services in Singapore are offering solutions at a much lower cost and allowing clients a greater scope of control. The costs associated with the acquisition of technology as well as the maintenance, security, and support of the IT teams are the current main concerns of companies. By engaging with a payroll service provider, it removes all the costs associated with the administrative process of your company and ensures that your focus is on your core competencies.
#4 Accuracy in calculating payroll for temporary staff
It’s one thing to calculate the fixed salary of permanent full-time employees, but another to have to calculate the salary of hundreds or thousands of contract employees who are paid by the hour or with OT fees/weekend allowances. Calculating payroll is a tedious and time-consuming process where you will need to gather physical timesheets and ensure accurate sign-off from various supervisors in different departments, so why not outsource your payroll? Then you can place all your focus on your core competencies.
Is it time for a change?
If you find your employees pressed for time and always required to work overtime whenever payday draws close, perhaps it’s time to seriously consider if payroll outsourcing is right for you. Do not be the company that only implements change when it gets seriously overloaded. That said, it is best to start thinking of outsourcing even before dire problems begin to arise. Do weigh the opportunity costs for time spent on payroll versus time spent on business goals and productivity in the short and long term.
BGC Group is an international manpower outsourcing and recruitment agency with a solid track record. We're adept at anticipating your business needs and are fully capable of providing you with intuitive solutions to effectively manage your entire HR hiring pipeline from start to finish.
Remember, you've got far more important things (such as your key business goals) to worry about. So let us help you take your mind off all that dreary, life-consuming amount of hiring paperwork with our pain-free automated processes in - recruitment, payroll services, and more.
Ready to outsource your payroll? Why not talk to us! Click here for more information.