No doubt that the thought of outsourcing the most labour-intensive job scope as a Human Resource manager or Business Owner has entered your mind several times. Yes, I’m talking about outsourcing your payroll. However, that thought is often pushed aside by overwhelming fears and doubts that it is still best to keep payroll “within the house”. As the saying goes, “People fear what they do not understand.” Let’s address some of those fears so you can understand what payroll outsourcing really is like, shall we?
FEAR #1: PAYROLL IS HIGHLY CONFIDENTIAL; AN OUTSIDER SHOULD NOT HANDLE IT
We agree! Payroll is highly confidential and do we dare say, sacred? This information, if accidentally leaked, could ruin relationships and break up a team. We all link our pay to our value – the higher we are paid, the more we are valued. We all like to think that we are valued the same, if not more, than our fellow colleagues. What are the odds of an employee handling payroll taking a toilet break in the middle of her pay run, leaving the computer vulnerable to any passing eyes. Pretty likely.
Also, all companies that handle payroll has disclosure clauses which protect you against data fraud. Companies should only be holding your data only for the period which they need it for; immediately deleting all information once it is no longer required.
FOOD FOR THOUGHT: If payroll is really that confidential, won’t it be safer to keep it away from those who would most probably be curious about it?
FEAR #2: OUTSOURCING PAYROLL MEANS ADDITIONAL COSTS
In a research conducted by ADP (Automatic Data Processing Inc), a global provider of cloud-based Human Capital Management and a leader in outsourcing services, cost was the number 1 factor that 49% of companies consider when switching from in-house payroll to outsourcing it.
While it is easy to look at the incoming cost of outsourcing and compare it with the cost of doing it in-house, there are a few hidden costs when doing payroll in-house. According to the study, there are different expenses incurred when doing payroll in-house: indirect labor costs, direct non-labor costs, system maintenance costs. Manhours taken to complete in-house payroll related tasks added up to nearly 6 weeks worth of manhours! Couldn’t that time be used to perform more meaningful tasks?
FOOD FOR THOUGHT: Now, compare those hidden costs to the upfront costs of outsourcing, which do you think actually benefits the company?
FEAR #3: OUTSOURCING INDICATES THAT I HAVE NO BANDWIDTH
Outsourcing is thought of as replacements or eliminating current resources. Allow me to propose new definitions of outsourcing which are promotions and reinforcements. The point where you feel that you are overwhelmed with more important tasks to handle is where most people start thinking about outsourcing. You will only outsource tasks that are not your core business functions, but necessary for your business to operate smoothly.
By engaging an external company to run your payroll, you are upgrading your job responsibilities to someone who spends more time planning and strategizing instead of just doing and repeating. Think of the outsourcing company as your reinforcement where they are here to help you ensure part of your responsibility as an employer or HR manager is done properly while you increase your capacity to focus on other parts of your job scope that is irreplaceable by automation or an external party.
FOOD FOR THOUGHT: Instead of it being an indication that there is no bandwidth, it, in fact, shows that you have outgrown that responsibility and that you recognize the value you could further add to the company other than just handling payroll.
FEAR #4: I DO NOT WANT TO LOSE CONTROL OF MY PAYROLL
What is important in a relationship between you and your payroll outsourcing company is communication. Both parties should know their responsibilities and their deliverables. If you need the pay to come in by 30th of each month, you have to work with your partner to ensure the data needed is given to them on time before the 30th. Each payroll outsourcing company has a different timeline, but all these should have been discussed before execution so that everyone has a clear picture of what they need to do and by when.
Of course, what if there’s a day that you decide to switch payroll in-house again? In this case, it is best to engage a vendor that also makes their platform available to users, so that you can just take over the account by transference of user rights. It is seamless, fast and hassle-free.
FOOD FOR THOUGHT: Remember that when you engage an external outsourcing company, they are working for you!
Doesn’t outsourcing your payroll seem less scary now? In addition to all these, a credible payroll outsourcing company keeps up to date with all the government statutory regulations so you do not have to worry about keeping up with the changes in regulations and complying. Save time, money and headache! Are you ready to improve your payroll?