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Times are tough. So is this a time to circle the wagons and keep tight control over your business functions? Or is the better move to boost your flexibility and offload tasks that can be delivered elsewhere?

The UK was the major economy hardest hit by Covid-19. So says the Organisation for Economic Co-operation and Development which, as the BBC reports, found that the UK economy contracted by 20.4% over the three months of lockdown, almost double the G7 contraction and almost ten times worse than the contraction we experienced at the height of the financial crisis.

By any definition, this is a big recession. And whilst some sectors are springing back to life with vigour, others – the arts, entertainment and hospitality, bricks and mortar retail and travel to name just a handful – are a long way from being out of the woods.

Every business is looking at how it can reduce overheads and increase efficiency. But is outsourcing in general – and outsourcing payroll in particular – the right move right now?

Outsourcing payroll – stick or twist?

We’ll defer to Forbes on this, who published an article last year which said: “selective outsourcing gives you the ability to create more flexible costs in a changing economy”, adding “it could help you and [your employees] weather the economic downturn”. Few areas of a business are quite as ripe for outsourcing as payroll and HR. So how can outsourcing right now help you successfully manage your way through the current storm?

Cut costs: We’ve written recently about the costs of outsourcing payroll for SMEs and larger businesses. Outsourcing will almost always be the cheaper option once you compare it with the true cost of retaining payroll in house (hint, it’s much larger than you imagine). To find out for sure, check the above posts.

Improve efficiency: There’s nothing efficient about senior employees who could be better employed elsewhere instead spending time processing payroll. But that’s what often happens when you keep payroll in house, and it’s particularly common when times are tight and you find yourself needing to cover a greater spread of roles with fewer staff. Outsourcing payroll means you keep more of your people’s skills focused on work that drives a profit.

Reduce the burden on your staff: Belt tightening often means one thing for staff – the sure-fire knowledge that their in-trays are about to get a lot bigger. Recessions inevitably lead to more work being shared around fewer people as businesses either find themselves having to lay off staff or delay recruitment. So where there’s a simple way to remove some of that burden, it makes sense to take it.

Reduce risk: The natural by-product of giving an already busy workforce more to do is that things get missed. It’s likely there are few areas of your business where you can afford to feel relaxed about mistakes, but when that area is payroll it’s vital that everything is right. Outsourcing hands the multiple risks – from keying errors to keeping up to date with legislation – to someone else.

Access new tech, new thinking and new ways of working: Unless change is driven by new legislation (pensions auto-enrolment, for example) in-house payrolls tend to do what they’ve always done. They have a system that works, and they stick to it.

Outsourcing gives you an opportunity to start afresh with payroll, which can lead to lots of minor and major improvements that stretch far beyond the benefits of payroll itself. From the simple efficiency of electronic payslips to the much greater potential savings associated with managed HR systems, time and attendance systems and international payroll management, you could find looking again at payroll leads to finding new efficiencies across all your business’ admin functions.

Protect morale: Sacrifices have to be made during a recession. But the more perks and benefits you have to trim, the more you risk affecting worker morale at precisely the time you need everyone on board. In the constant battle to find the costs you can cut that won’t lead to unintended consequences, payroll is the prime candidate.

If you’re looking for ways to weather the recession, outsourcing your payroll could be a simple and powerfully effective first step. Take it with us.