There has been a lot of buzz in recent years about outsourcing jobs. From call centers to payroll, there is a company that can be hired to complete the task and often with some perks. Even with perks, there are plenty of people against outsourcing as well. One topic I think is important to highlight when talking about outsourcing is HR payroll outsourcing. While you will find people who are very passionate about outsourcing in general, few are willing to do much about the outsourcing of tech support or call center jobs; but what about payroll?
Edwards (2007) highlights 10 benefits to outsourcing payroll including less cost, less worry, higher productivity and increased reliability. Certainly, this applies slightly differently to big companies than it does to small, but outsourcing payroll saves office space as well as the cost of running the additional office equipment so it is easy to see how this could be a cost saver. Outsourcing payroll to a team specifically designated only to this task could also logically increase reliability, accuracy and speed which most definitely lessens the burden of worry regarding payroll mistakes.
The cons? An article in Payroll Manager’s Letter cautions against outsourcing payroll without paying specific attention to the qualifications as well as the capabilities of the chosen company. For example, the company should be capable of utilizing Electronic Federal Tax Payments System (EFTPS) in order to monitor the deposits being made. Another issue that could arise is taxes; just because your payroll is being performed elsewhere does not mean that you are not responsible for all of the associated taxes. It is important to be aware of tax due dates to avoid fees.
Another issue that is closely related is ensuring that the chosen company is legitimate, this is especially true if foreign companies are being utilized. For example, in doing a simple search, one can see that there are a number of companies offering services of payroll processing in Singapore and they all seem like great choices. It is important to look further into each company under consideration prior to any contracts being signed or fees being paid to ensure it is not a scam. Anyone can create a website! Be sure you know the company exists and have actual contact information prior to making commitments.
That leads us to the original question, is outsourcing really better? The answer is that it really depends on the payroll needs of your company. Kildal (2015) provides a simple and concise article on how to decide if outsourcing payroll is right for your company. Among the many other things to think about, also consider that most employees in payroll position have the education to back that role up and it may be worth it to keep payroll in house despite of some of the obvious advantages of outsourcing.
Dos and Don’ts for Outsourcing Payroll. (2015). Payroll Manager’s Letter, 31(8), 2-4.
Edwards, J. (2007). 10 reasons to outsource payroll. HRWorld.
Kildal, S. (2015). How to Decide Between In-House or Outsourcing Payroll Services. CPA Practice Advisor, 25(1), 13.