Human resource professionals will tell you that they have a thankless job. They only hear from employees when things go wrong and there is ultimate silence when everything is going well. It is a detailed and repetitious job that is rich with possibilities for errors.
There is no question why outsourcing payroll is so popular since its first inception over 50 years ago. Payroll service firms can handle almost everything that frees up companies Human Resource departments to handle more strategic matters.
Outsourcing although is not for everyone. Large companies can afford to have the staff and advanced computer systems to handle payroll internally and do it more efficiently should they have complicated payrolls. Quite often payroll services use a standardized system that does not allow for unique and complicated payroll requirements. Frequently a company will only outsource part of their payroll and keep part of it internal. Depending on an employer’s size and expertise as well as cost and technology determines whether to keep it internal or outsource, in whole or part.
Outsourcing does allow many companies, especially small and medium sized ones to concentrate on their core business. It allows a small staff to focus on other HR related tasks such as employee relations, insurance and many other tasks. In addition, if you outsource to the correct, experienced provider, you will be able to obtain reliable and qualified services that might not be available if you elected to do payroll in house.
Payroll is one of the most commonly outsourced HR functions with 13% of all employers outsourcing their entire payroll and another 35% outsourcing partially. Generally smaller businesses up to a few thousand employees outsource their payrolls. Larger companies are now jumping on board, as well.
Previously big corporations were too complex for payroll companies to handle but with the advances in technology there has been much change and improvement in this arena.
The decision to outsource payroll or not, first must consider costs. Does it cost less to process payroll internally or hire an outside company to do your payroll? The answer is not always clear. A rule of thumb to remember in figuring this out is that payroll services generally charge $1 to $2 per check for basic processing and $4 to $5 per check for the whole complete transaction which includes a call center, time and labor management system, direct deposit and other add ons.
Of course, when it comes to outsourcing payroll operations and functions for your small business, you will want to make certain that you utilize only the services of a qualified and experienced provider. Because of the serious and sensitive nature of payroll matters, it is important that you do obtain the best possible and most experienced service provider that you can find at this point in time.
