Until recently payroll management was just the maintenance of virtual or actual files and folders containing details about remunerations and benefits of a company’s employees. However, now payroll management is more than a monthly or fortnightly record of payments. Rather it is a detailed and conscious effort of rewarding employees, improving their company loyalty and motivation, as well as reducing employee turnover. With more and more software and technical developments, it has also become a rather specialized task to be managed by skillful people. If a company chooses to keep payroll management in-house, then there is a specified amount of time and resources that needs to be dedicated to payroll management. However, the benefits of outsourcing payroll management are being increasingly realized by big and small businesses alike. Let’s look over some of the cost and non-cost advantages to be gained by letting an external company take care of your payroll management.
Reasons For Outsourcing Payroll Services
Cost and Risk Reduction
Let’s start with the most obvious yet most significant advantage – decrease in your operating expenses. Outsourcing your payroll management to experts not only mean that you don’t have to hire a permanent employee yourself, it also means that you don’t need to provide the working space, utility expenses, or overtime salaries etc. At the same time, the fact that an expert is handling these documents, you also prevent the risk of preparing faulty and erroneous statements, thereby also insulating your business against the fines and penalties. Saving costs on multiple ends while getting optimized performance is a win-win by every angle.
Time & Resource Conservation
When you divert an employee already working some other task, then either their primary job suffers or their motivation suffers in payroll management tasks. The extra expenses that go into keeping payroll services in-house also include separate working space, as well as intangible costs like employee dissatisfaction with their job description, as well as loss of trust among the employees. The fact of the matter is that while payroll management strengthens the basis of your business operations, on its own it does not add to your sales generation or profits. Therefore the time and resources that go into it could be better used somewhere else in the core activities of the business, improving competitiveness and efficiency.
Security & Privacy
In the first glance it might sound ironic to have an external entity take care of your books, but if you look closely you will see that when you have one of your own employees in charge of the salaries and remunerations of other employees, the risk of theft, fraud and information leakage is higher than if a third party, with no interest with your employees is managing your books under contract. There is an added factor – the location of the data. If you keep all your sensitive books in-house, and your employees are aware of this, then the risk of that data being stolen and misused is much higher than if it is being kept and managed remotely.
Software and Technical Access
When you put together all the points mentioned above, you would realize that the primary factor at the heart of these benefits is technology. The human resource and HRIS software being used by the outsourcing companies can be quite an expensive investment for small businesses to buy and manage. However, by outsourcing the payroll management you get access to state of the art technology, cost reduction, and data security, all without having to invest a single penny on the technical front.
Payroll Services Outsourced (Segmentation)
- 11% - Manufacturing
- 10% - Health care / Medical
- 8% - Non-Profit
- 6% - Software & Technology
- 6% - Payroll Provider
- 5% - Construction
- 5% - Food & Beverage
- 49% - Other
Cherries on Top!
When you hire an outsourcing firm to do your payroll management, you more often than not get more than you initially expected. A whole array of value added services are also on the table that may include communication with employees, management and updating of personal employee information, performance reviews, trainings and training records. If you enter into such an agreement with your chosen BPO provider, you might as well have a partner for recruitment and human resource outsourcing as well. Even though these delve into a separate category of outsourcing operations, but the companies offering payroll management services often have the whole HR package on offering.
Peace of Mind
If you are an entrepreneur then you are already familiar with the significance of having a peaceful mind to ensure optimized business performance and capitalizing on every growth opportunity. As talked earlier, payroll management create a lot more pressure on time and resources and just not add enough to the sales and revenues. Therefore, once you have gotten someone else on board to manage this seemingly minor but incredibly important task of your business management, you can sleep at peace at night knowing that your employees are happy, your statements and business are legally compliant, and your data is secure.