Payroll outsourcing is a hot topic. The COVID-19 pandemic has highlighted a variety of weaknesses in infrastructure and processes and opportunities to take advantage of specialist services and technologies that can enable organisations to function with fewer risks and greater resilience. Zalaris takes a closer look at why organisations choose to outsource their payroll to help you determine whether outsourcing is right for your organisation.
Below are ten common considerations that factor into people choosing to outsource their payroll:
1. Payroll is a time-consuming process that is fault intolerant. As a result, the cost of running payroll in-house is typically higher than outsourcing the payroll. That is before you even begin to factor in costs around fines or dealing with audits, which can significantly impact the costs of an in-house payroll department.
2. Scaling payroll as an organisation grows is difficult, mainly where mergers, acquisitions and rapid periods of growth occur. In-house payroll can find it challenging to scale in these circumstances, and reconciling payroll differences can introduce a level of multi-payroll complexity that such departments are not equipped to manage.
3. Speed of payroll generation can also quickly become an issue. Payroll has fixed timescales to work within, with practically zero flexibility and typically limited contingency. Outsourcing partner processes are finely tuned and optimised. Along with the technologies and people they have in place, they will invariably be faster at generating a payroll than an in-house team. This reduction in time to complete allows for a higher level of contingency, with more time available to complete processing. This greater contingency can, in turn, reduce the associated stress for the organisation as they no longer have the same time pressures to contend with.
4. Where organisations span multiple geographies, there are requirements for more legislation sets to be followed. These requirements can dramatically increase complexity. Managing this in-house where resources are likely more constrained than in an outsourcing partner can lead to challenges, particularly when multiple regions experience parallel changes in legislation. These scenarios introduce an increased likelihood of encountering issues for which the organisation is not structured to address.
5. Organisations typically perform best on their core competencies. If Payroll is not a core competency, then the chances are better than average that outsourcing to a specialist will result in a better-aligned deployment of resources within the organisation.
6. Outsourcing partners work at a scale that all but the very largest global organisations would be unable to match. As a result, such partners can afford to invest in the latest technologies to support their large customer base. This level of investment means that such partners work with the very best tools, further helping to increase processing throughput and minimise the occurrence of issues. It also allows them to use best in class technologies to provide first-class security and system reliability, and integrity.
7. In keeping with the last point, the level of technology investment from outsourcing partners can enable partners to provide services that would not be cost-effective to deliver at the scale at which most in-house payroll departments operate. These services could be anything from abuse and fraud-checking to payslip document archival or advanced forecasting analytics.
8. The scale of payroll expertise within an outsourcing partner is almost sure to exceed a single organisation’s scale. Expertise comes from not only having the right qualifications and knowledge but the experience of applying them. Outsourcing partners have large workforces with vast quantities of experience that cannot be found in the same concentration anywhere else. This setup also gives partners greater levels of business continuity as not everything rests on a select few people to operate. In fact, some outsourcing partners offer business continuity services for this very reason. Some outsourcing partners also provide ways to TUPE in-house payroll staff into the partner to draw upon the expertise and enable those staff to grow into even more diverse and rewarding roles within the payroll space.
9. The pace of technology change and the challenges of compliance can often be a challenge for in-house teams. IT infrastructure must be maintained to ensure it is secure and meets the requirements for the payroll solution being used. It also may have to be developed or configured to meet particular regions’ legal obligations to remain compliant. This undertaking entails the use of a significant amount of specialised resources to do it well. Resources must be skilled and experienced to deliver against these critical requirements, and that is simply something that most organisations struggle with.
Even when engaging a third party, things like IT infrastructure can incur technically challenging conversations when it is also intrinsically tied into business processes. Outsourcing partners have people who deeply understand both the technology and business processes. Their scale of operation allows them to deploy the best resources available to meet a customer’s needs. Sometimes as they arise, but more often proactively, and without the customer needing to manage it.
10. Outsourcing payroll partners’ core business is the delivery of payroll services. It is their raison d'être, the basis for their core organisational values and drivers. The level of enthusiasm across an entire organisation that lives and breathes such services can be hard to match up to. People who love their job tend to do a better job, which carries on through the line to the end customer and their employees.
The likelihood is that at least some of these points resonate with the operations in your organisation. That is not surprising. By 2019, one survey by Statista showed that almost 40 per cent of companies outsourced their payroll to some level. That figure was rising and predated the pandemic-driven trends that began to emerge.
If you are interested in finding out more about how you could adopt some level of payroll outsourcing and the benefits that this could provide for your organisation, contact Zalaris. We would be happy to share our expertise and work with you to determine the most appropriate approach to suit your organisation’s needs.
Author: Stephen Millard Consulting Manager of Zalaris
Source: Zalaris
Payroll outsourcing is a hot topic. The COVID-19 pandemic has highlighted a variety of weaknesses in infrastructure and processes and opportunities to take advantage of specialist services and technologies that can enable organisations to function with fewer risks and greater resilience. Zalaris takes a closer look at why organisations choose to outsource their payroll to help you determine whether outsourcing is right for your organisation.
Below are ten common considerations that factor into people choosing to outsource their payroll:
1. Payroll is a time-consuming process that is fault intolerant. As a result, the cost of running payroll in-house is typically higher than outsourcing the payroll. That is before you even begin to factor in costs around fines or dealing with audits, which can significantly impact the costs of an in-house payroll department.
2. Scaling payroll as an organisation grows is difficult, mainly where mergers, acquisitions and rapid periods of growth occur. In-house payroll can find it challenging to scale in these circumstances, and reconciling payroll differences can introduce a level of multi-payroll complexity that such departments are not equipped to manage.
3. Speed of payroll generation can also quickly become an issue. Payroll has fixed timescales to work within, with practically zero flexibility and typically limited contingency. Outsourcing partner processes are finely tuned and optimised. Along with the technologies and people they have in place, they will invariably be faster at generating a payroll than an in-house team. This reduction in time to complete allows for a higher level of contingency, with more time available to complete processing. This greater contingency can, in turn, reduce the associated stress for the organisation as they no longer have the same time pressures to contend with.
4. Where organisations span multiple geographies, there are requirements for more legislation sets to be followed. These requirements can dramatically increase complexity. Managing this in-house where resources are likely more constrained than in an outsourcing partner can lead to challenges, particularly when multiple regions experience parallel changes in legislation. These scenarios introduce an increased likelihood of encountering issues for which the organisation is not structured to address.
5. Organisations typically perform best on their core competencies. If Payroll is not a core competency, then the chances are better than average that outsourcing to a specialist will result in a better-aligned deployment of resources within the organisation.
6. Outsourcing partners work at a scale that all but the very largest global organisations would be unable to match. As a result, such partners can afford to invest in the latest technologies to support their large customer base. This level of investment means that such partners work with the very best tools, further helping to increase processing throughput and minimise the occurrence of issues. It also allows them to use best in class technologies to provide first-class security and system reliability, and integrity.
7. In keeping with the last point, the level of technology investment from outsourcing partners can enable partners to provide services that would not be cost-effective to deliver at the scale at which most in-house payroll departments operate. These services could be anything from abuse and fraud-checking to payslip document archival or advanced forecasting analytics.
8. The scale of payroll expertise within an outsourcing partner is almost sure to exceed a single organisation’s scale. Expertise comes from not only having the right qualifications and knowledge but the experience of applying them. Outsourcing partners have large workforces with vast quantities of experience that cannot be found in the same concentration anywhere else. This setup also gives partners greater levels of business continuity as not everything rests on a select few people to operate. In fact, some outsourcing partners offer business continuity services for this very reason. Some outsourcing partners also provide ways to TUPE in-house payroll staff into the partner to draw upon the expertise and enable those staff to grow into even more diverse and rewarding roles within the payroll space.
9. The pace of technology change and the challenges of compliance can often be a challenge for in-house teams. IT infrastructure must be maintained to ensure it is secure and meets the requirements for the payroll solution being used. It also may have to be developed or configured to meet particular regions’ legal obligations to remain compliant. This undertaking entails the use of a significant amount of specialised resources to do it well. Resources must be skilled and experienced to deliver against these critical requirements, and that is simply something that most organisations struggle with.
Even when engaging a third party, things like IT infrastructure can incur technically challenging conversations when it is also intrinsically tied into business processes. Outsourcing partners have people who deeply understand both the technology and business processes. Their scale of operation allows them to deploy the best resources available to meet a customer’s needs. Sometimes as they arise, but more often proactively, and without the customer needing to manage it.
10. Outsourcing payroll partners’ core business is the delivery of payroll services. It is their raison d'être, the basis for their core organisational values and drivers. The level of enthusiasm across an entire organisation that lives and breathes such services can be hard to match up to. People who love their job tend to do a better job, which carries on through the line to the end customer and their employees.
The likelihood is that at least some of these points resonate with the operations in your organisation. That is not surprising. By 2019, one survey by Statista showed that almost 40 per cent of companies outsourced their payroll to some level. That figure was rising and predated the pandemic-driven trends that began to emerge.
If you are interested in finding out more about how you could adopt some level of payroll outsourcing and the benefits that this could provide for your organisation, contact Zalaris. We would be happy to share our expertise and work with you to determine the most appropriate approach to suit your organisation’s needs.
Author: Stephen Millard Consulting Manager of Zalaris
Source: Zalaris