Payroll outsourcing can ensure organisational effectiveness and good use of manpower
With compensation and benefits becoming a top priority among the professionals of today, creating schemes to satisfy their varying needs is no longer a piece of cake. This has led the companies of today to look for alternative methods to make this task easier. Payroll outsourcing is such a measure that has revolutionised the management and provision of compensation to employees. It has made the process much more efficient as compared to conventional methods and a large number of companies are now opting for it because of its numerous advantages.
Rahul Kulkarni, head HR, Kale Consultants, explains the process, "Payroll outsourcing has taken a big jump in the last few years with many large organisations embracing it. Companies are using this concept to bring in greater transparency and also spare their administration from any hassles. Payroll outsourcing basically involves an outside agency doing the work of managing the salaries of employees, its calculation, payment and disbursement, along with other related functions. Using an outsourcing service makes it possible for an organisation to manage the payroll process for their employees without the need to maintain a large payroll department or involving the in-house HR department."
Payroll outsourcing provides the company with numerous benefits that are absent in the case of internal methods. Harinder Singh, HR & strategic head Vigneshwara Developers, highlights the advantages, "The strategy of outsourcing is to firstly identify the core activities, which are the essence of the business and turn the management's focus on these, while concurrently transferring the other activities on a recurring basis, to a service provider who specialises in them.
The key benefits from payroll outsourcing are -
• Cost savings for the company on outsourcing payroll processing are extremely significant and can go up to 50 per cent at times;
• Cost reductions and cost effectiveness can be achieved;
• Productivity is improved, as service quality provided is excellent and this frees the company from non-income generating tasks;
• Latest technology and software for payroll processing are used;
• Indian payroll processing service providers have a very highly specialised and expansive knowledge base in finance and accounting, which would be of help to businesses globally.
Outsourcing of compensation management enables the staff of a company to focus more on business activities and save time and efforts. Manisha Kadagathur, head talent, AEGON Religare Life Insurance, elaborates, "Payroll is a once-a-month activity and timelines are accordingly set. Therefore, companies do not need to employ full-time resources. Through outsourcing, companies benefit by being able to deploy resources with the right skills and knowledge to focus on core HR issues like talent management, quality of hiring, etc that need attention, instead of routine tasks."
What is the scope of the payroll outsourcing industry in future India? Devendra Singh Chauhan, VP HR, BS Transcomm Ltd., answers, "From a foundational role to a more strategic one, the potential and scope for payroll outsourcing is huge. From web-based technology, data maintenance services, tax management, reimbursements and payslips to operating model definition, job evaluation, survey management, compensation benchmarking, best practices research and trending, compensation effectiveness, incentive plan design and communication, this industry has a lot to explore and offer in India."
Thus, payroll outsourcing can truly enable companies to use their resources and manpower in a much better manner and increase their productivity as well as efficiency.
With compensation and benefits becoming a top priority among the professionals of today, creating schemes to satisfy their varying needs is no longer a piece of cake. This has led the companies of today to look for alternative methods to make this task easier. Payroll outsourcing is such a measure that has revolutionised the management and provision of compensation to employees. It has made the process much more efficient as compared to conventional methods and a large number of companies are now opting for it because of its numerous advantages.
Rahul Kulkarni, head HR, Kale Consultants, explains the process, "Payroll outsourcing has taken a big jump in the last few years with many large organisations embracing it. Companies are using this concept to bring in greater transparency and also spare their administration from any hassles. Payroll outsourcing basically involves an outside agency doing the work of managing the salaries of employees, its calculation, payment and disbursement, along with other related functions. Using an outsourcing service makes it possible for an organisation to manage the payroll process for their employees without the need to maintain a large payroll department or involving the in-house HR department."
Payroll outsourcing provides the company with numerous benefits that are absent in the case of internal methods. Harinder Singh, HR & strategic head Vigneshwara Developers, highlights the advantages, "The strategy of outsourcing is to firstly identify the core activities, which are the essence of the business and turn the management's focus on these, while concurrently transferring the other activities on a recurring basis, to a service provider who specialises in them.
The key benefits from payroll outsourcing are -
• Cost savings for the company on outsourcing payroll processing are extremely significant and can go up to 50 per cent at times;
• Cost reductions and cost effectiveness can be achieved;
• Productivity is improved, as service quality provided is excellent and this frees the company from non-income generating tasks;
• Latest technology and software for payroll processing are used;
• Indian payroll processing service providers have a very highly specialised and expansive knowledge base in finance and accounting, which would be of help to businesses globally.
Outsourcing of compensation management enables the staff of a company to focus more on business activities and save time and efforts. Manisha Kadagathur, head talent, AEGON Religare Life Insurance, elaborates, "Payroll is a once-a-month activity and timelines are accordingly set. Therefore, companies do not need to employ full-time resources. Through outsourcing, companies benefit by being able to deploy resources with the right skills and knowledge to focus on core HR issues like talent management, quality of hiring, etc that need attention, instead of routine tasks."
What is the scope of the payroll outsourcing industry in future India? Devendra Singh Chauhan, VP HR, BS Transcomm Ltd., answers, "From a foundational role to a more strategic one, the potential and scope for payroll outsourcing is huge. From web-based technology, data maintenance services, tax management, reimbursements and payslips to operating model definition, job evaluation, survey management, compensation benchmarking, best practices research and trending, compensation effectiveness, incentive plan design and communication, this industry has a lot to explore and offer in India."
Thus, payroll outsourcing can truly enable companies to use their resources and manpower in a much better manner and increase their productivity as well as efficiency.
While universally this is true, the fact is that many clients do not see how this becomes cost effective especially with smaller numbers. We too have not been able to show a cost benefit to the client vis a vis the client in-sourcing it. The clients cost is minuscule since it does not contain any margins which the service provider will have to levy
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