Risks and Benefits Of Outsourcing Payroll
Payroll outsourcing can take the stress out of payroll by letting qualified industry experts manage the service on your behalf; payroll outsourcing has many benefits as well as risks which we would discuss in this article. As an employer, people are your most valuable assets; pay and reward are top of many employees’ key motivations. Getting your payroll solution wrong can have a serious impact on ensuring you have an engaged workforce.
Payroll is a science
Every day, payroll is becoming more of a science due to ever-changing legislation such as auto-enrolment, shared parental leave and the payrolling of benefits. On top of this, organizations are faced with an ever decreasing talent pool of payroll professionals, resulting in tough competition to find the right talent.
The Benefits of Payroll Outsourcing
- It Reduces Errors: By using efficient data collation and automated processing techniques usually not available in-house, you reduce manual intervention and risk of payroll errors thereby ensuring a hassle-free payroll processing.
- It Reduces Dependence On In-House Expertise: A payroll service has not one expert but a whole team of payroll experts. So, unlike in-house payroll, you are never affected by absenteeism caused by illness or annual leave.
- Stay Informed: A professional payroll provider will keep you posted with ongoing revenue updates, help you decide on payment methods and guide you on statutory benefits and norms.
- Ensure Security And Continuity Of Your Payroll: Outsourcing companies not only secure your payroll data but invest in disaster recovery facilities to ensure your payroll can always be run.
- Cost and Time Efficiencies: Most importantly, outsourcing reduces cost both direct and indirect costs, thus enabling you to invest your time and resources into growing your business. It also frees up time for companies to focus on their key business strategies, whilst ensuring their employees remain focused and motivated on the job in hand.
The Risks of Payroll Outsourcing
- The Risk of Exposing Confidential Data: When the payroll of an organization is outsourced to a third party, you risk exposing the confidential data of your employees and even the company which might pose a serious threat to the organization.
- Hidden Costs: Although, outsourcing payroll services saves cost but sometimes, there might be some hidden charges during the signing of the contracts through international borders which may not be known to the organization.
- Synchronization of Deliverables: Some of the risks of payroll outsourcing include the delay in delivery time, production of quality below the standard and inappropriate classification of responsibilities. This happens when you do not choose the right partner to do your outsourcing. These factors are easier to regulate within an organization.
Payrollserviceaustralia.com.au recommends you to weigh your payroll services and to set guideline and checklist as to which the third party provider must follow. There is the need to weigh the risks and benefits of outsourcing your payroll services before approaching it; this is because of the impact it may have on the effective running of the organization.