A new report suggests that organisations that keep their payroll, time and attendance and workforce admin in-house will pay 20% more than they would if they outsourced it. We explore how financial cost is just the tip of the iceberg.
20%. That’s how much more The Global Payroll Outsourcing Market Report 2016-2020, published by Research and Markets, says your business is paying for payroll if you process it in-house.
The report also confirms payroll outsourcing “as the fastest-growing segment of the global human resource outsourcing market” and predicts that market will grow still further – by 4.4% over the next four years.
Outsourcing costs less
This is a global report, and it’s fair to say that in the UK payroll outsourcing is a rather more mature market than in some other territories, but that 20% figure remains an eye-opening one.
We’re always hearing anecdotal evidence that supports this figure. If you’re still processing payroll in house, there’s a greater likelihood you’re still processing large portions of it manually. That will leave you at greater risk of human error from double-keying and other simple but all too common mistakes. It will take time – in processing payroll in the first instance, and in pouring over spreadsheets when an error is revealed. Then there’s the time and cost of keeping your payroll processes up to date and in line with legislation.
Exactly how much time your business saves depends on the size of the company and the number of employees, but outsourcing means even modestly-sized enterprises can save hours in the time it takes to run the payroll.
More than money
In addition to cost, the report also explored the other factors that drive companies to outsource their payroll. Top of the list came the desire to free HR staff from administrative duties so they can spend more time doing something else.
Other factors were “cost reduction, risk management, improved management control, compliance, and business expansion.”
They’re all powerful reasons, but let’s focus for now on just two: risk management and compliance. Outsourcing is a weight off the shoulders of business owners and admin staff who have neither the time nor expertise to understand the implications of the latest tax or pension legislation.
It saves them doubly: from the time spent getting to grips with and implementing change, and again by removing the risk of failing to implement it correctly (or at all).
20% may be the immediate financial saving in outsourcing payroll. But in reality, the savings in terms of risk, stress, workload and the penalties for getting it wrong are greater still.
If you’d like to outsource your payroll, you can talk about it here.