Microsoft global payroll services
Reinventing global payroll
- What Accenture Did
- People and Culture
- Value Delivered
- Related Capabilities
Complexity, fragmented processes and compliance risks topped the list of issues facing Microsoft’s global payroll teams. The only answer was a global solution.
Microsoft believed it could successfully address those challenges while also improving the employee experience, but nobody believed it would be easy. In fact, it wasn’t clear a true global solution was even possible.
Microsoft was unable to identify a similar payroll unification and transformation project that addressed so many employees across so many countries. Further complicating the initiative was the need to deal with multiple stakeholders, challenging controls and operations complexities while simultaneously addressing potential privacy risks and data accuracy concerns.
What Accenture did
Based on a long and successful history of prior engagements, Microsoft contracted with Accenture to serve as the single global supplier of payroll governance and data administration, to help implement the ground-breaking global project named OnePayroll.
More than 50 external suppliers providing payroll services in 85 countries were then consolidated to three. Accenture and Microsoft worked together with them to standardize their payroll processes, handoffs reporting and other workflow.
Accenture supported Microsoft in creating a “one-stop-shopping” Global Payroll Services Portal enabling employees to easily submit and escalate inquiries. To facilitate the early and ongoing success of OnePayroll, Microsoft and Accenture worked together to:
Greater Visibility
Create a framework to help global stakeholders obtain greater visibility into major operational issues in specific countries.
Improve Quality
Improve quality of service by restructuring service delivery teams to expedite inquiry response rates.
Communication Framework
Establish a formal communication framework to track performance and provide Microsoft with regular visibility.
Managing transitions to reduce risk and disruption
- Comprehensive planning exercises to define the global process for payroll in each country.
- Transition broken into waves over 2.5 years, with a typical wave including more than 20 countries.
- Development of two key roles: Accenture’s Assistant Payroll Consultants (APCs) Microsoft’s Payroll Service Delivery Managers (PSDMs)
Ongoing improvements in real time
- Quality Assurance and Training team focused on improving standardized processes across all service regions.
- Traditional monthly business reviews were restructured to stimulate engagement with a broader range of stakeholders.
- Developed and implemented a Power BI tool, providing a consolidated dashboard of service metrics.
People and culture
Accenture continues to support high performance in Microsoft’s global payroll through commitments to efficiency, quality, consistency and continuous collaboration. Rigorous attention to service level agreements and a mindful focus on the employee experience enables the team to apply valuable learnings as each new country joins OnePayroll.
With stable operations seen across regions, Accenture and Microsoft are shifting focus to see how to automate processes to minimize manual entries and improve quality. Plans are underway to bring the full scope of OnePayroll service to more than 100 countries – proving once again that when two leading companies collaborate, anything is possible.
Value delivered
OnePayroll, which offers a single, standard way for employees to interact with payroll operations is now:
Serving more than 43,000 employees in 88 countries.
Operating in 15 languages from four Accenture Delivery Centers.
Managing, on average, nearly 2,900 employee inquiries per month.
Preventing overpayments and underpayments, including more than US$10 million to date.
View Infographic
Mission Impossible: Find out how Microsoft and Accenture turned the "impossible" into an opportunity.
Related capabilities
Talent & hr.
Reshaping the employee experience and improving retention with innovative workforce operating models
A unique human-machine operating engine that transforms business operations and delivers results.
Learn how intelligent operating models drive sustainable growth.
Payroll Outsourcing In 2023: The Ultimate Guide
Reviewed By
Updated: Jan 7, 2023, 12:55am
Table of Contents
What is payroll outsourcing, outsourced payroll functions, how payroll outsourcing works, payroll outsourcing benefits, payroll outsourcing disadvantages, best practices for outsourcing payroll, bottom line, frequently asked questions.
The process of managing employee payroll is often time-consuming—unless, that is, another company is hired to take care of it instead. Payroll outsourcing can lead to big cost savings and provide access to payroll management experts, but doing so also comes with unique challenges and risks. Our 2023 guide takes you through the ins and outs of how payroll outsourcing works and how your company can best evaluate a possible outsourcing strategy.
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What Is Payroll?
Payroll involves much more than simply mailing checks. It encompasses a variety of tasks, not all of which are necessarily carried out by the same entity. The process begins with the integration of employees into a payroll system and extends through end-of-year tax responsibilities.
Payroll “functions” include gathering employee information, setting up automatic payments and direct deposits, tracking hours or timesheets, calculating wages owed, distributing pay stubs and even garnishing wages as directed by court order. It also includes managing information relevant to the tax process such as health insurance and workers’ compensation claims.
The term “payroll” can describe both a company’s list of employees to be paid and also the total amount an employer owes in wages and salaries. In the modern business context, however, payroll most often refers to the process of paying employees or to the entities responsible for carrying this out.
What Is Outsourcing?
For most of the 20th century, companies strove to own and exercise control over all business functions and assets. Economic theories of the day advocated growth in all reasonable directions to exploit economies of scale. This mindset of vertical integration extended into companies’ internal processes as well. It wasn’t until the late 1980s that many companies, hindered by bloated internal structures, began to see broad strategic value in “hiring away” work once completed in-house. Once the possible cost savings of the practice became clearer, there was no turning back.
This act of hiring away business functions, or “outsourcing,” is now recognized as a widely applicable business strategy, even if its ethical implications and socioeconomic, political and cultural consequences are often overlooked. Its financial value as a near-term, cost-cutting measure has been boosted dramatically by globalization, which opened access to international labor far less immediately expensive than America’s domestic workforce.
Outsourcing Payroll
In the early days of strategic outsourcing, companies were most comfortable hiring away low-skill tasks distant from sensitive business areas. Nowadays, many companies do the opposite and outsource critical functions such as customer service and money-management tasks. This has grown to include many activities normally performed by administrators or human resources departments—including payroll duties.
Allowing a third party to direct company funds and manage highly sensitive information may once have been unthinkable. Much of the payroll process, however, involves routine tasks and follows established guidelines, making it possible to delegate responsibilities to trusted partners without relinquishing decision-making authority.
What Is Payroll Co-Sourcing?
“Payroll co-sourcing” describes a hybrid model in which some elements of the payroll process are hired away while others are completed in-house. One advantage of splitting up the responsibilities is that companies can get “hands-on” in specific areas they’d rather not entrust to a third party, all while still enjoying some of the cost advantages of outsourcing. Somewhat to the contrary, other companies co-source payroll duties if they believe an external service will be more adept at specific tasks, keeping the process in-house except for when they’d rather turn to an expert.
It’s possible (though not ubiquitously desirable) to hand over virtually all payroll functions to an external service. Outsourced responsibilities can include:
- Payroll account setup
- Payment method setup
- Tracking time worked
- Calculating wages owed
- Delivering pay
- Instituting security measures for safeguarding company and employee information
- Ensuring compliance with government regulations
- Withholding payroll taxes, income taxes and garnished wages
- Managing employee deductions
- Remitting payroll taxes
- Completing end-of-year tax work
Initial Steps
Preparing to hire away payroll functions represents the majority of a company’s actual work in the outsourcing process. The first step is for the company to decide on a preferred degree of outsourcing. In other words, whether the company wishes to fully outsource or co-source, and if the latter, how does it wish to divide responsibilities? A company may decide, for example, that they’d like a third-party service to handle only the tax issues associated with payroll.
Arranging Payroll Outsourcing
In 2023, a wide selection of “payroll outsourcing providers” are to be found both domestically and internationally. While different companies will have different criteria for evaluating a good match, they all must ensure a provider maintains adequate protections for employee data and complies with relevant regulations.
Once a payroll outsourcing provider has been selected, both parties must agree on “terms of engagement.” This is when the provider’s specific duties are officially established and also when compensation for services rendered is addressed. Finally, the client shares all relevant information the provider needs to complete the payroll functions it will assume.
Making Payroll Happen
Once information has been exchanged and procedures established, the payroll outsourcing provider begins its actual duties. This almost always involves distributing pay on a clearly defined schedule (every two weeks is popular). As with performing payroll functions in-house, applicable taxes must be withheld by the provider before payments are made.
Typically, providers report to the client on a regular, predetermined basis, confirming services rendered and detailing performance. For the client, this is an opportunity to ensure everything is going according to plan. The final major component of the process is for outsourced end-of-year tax duties. This includes both submitting documentation to tax authorities—which the provider has maintained throughout activities—and remitting the tax dollars themselves.
Cost Savings
In many cases, companies outsource payroll because they’ve determined it to be more cost-effective than managing payroll in-house. This has historically been one of the main incentives for any kind of outsourcing, and payroll functions are no exception. If these functions are passed along to a payroll outsourcing provider in a country with generally lower salaries and wages, much of the difference in employee compensation is recouped by the client company and savings can be significant.
This can be true even when payroll is outsourced domestically. A New York- or San Francisco-based company that keeps payroll in-house, for example, must pay “big city salaries” to attract the right employees for managing payroll, just like the rest of its internal workforce. If many hours of work can instead be assumed by third-party employees somewhere with a lower cost of living , the outsourced functions tend to become cheaper to perform.
To save even more money, consider using a free payroll software solution.
Letting Professionals Do the Work
Another benefit to outsourcing is that payroll functions can be assumed by providers specializing in effective payroll management. For most companies, performing payroll functions in-house amounts to nothing more than an important housekeeping duty; the company itself is expert in something entirely different. A payroll outsourcing provider or “payroll service bureau,” on the other hand, may perform payroll functions and nothing else. If it does offer other services as well, these are likely to be in similar areas.
Not only does this imply greater overall experience with matters of payroll, it also means that the third-party provider should have effective management systems in place for the full range of payroll functions. They likely use employees with task-specific training and have all the necessary software on hand.
Naturally, the quality of payroll outsourcing will vary, but it’s clear many companies still see these third-party payroll managers as more effective than internal capabilities. Mistakes involving taxes or adherence to regulations can be time-consuming and costly to resolve, so there’s a strong incentive to get everything right the first time. “Leaving it to the pros” can be especially beneficial for large companies with complex and burdensome payroll responsibilities.
Increased Focus on Core Functions
A company’s core business functions—whatever it does to generate revenue—are understandably its main priority. Devoting resources to more peripheral functions such as payroll is unavoidable, but relying on time and effort from in-house staff inevitably chips away from opportunities for revenue or growth and can further detract from company efficiency when unexpected issues arise.
The only types of businesses that identify payroll management as a core function are, well, the payroll outsourcing providers themselves. Outsourcing payroll stands to greatly reduce a major administrative distraction for most companies, allowing them to “cut the fat” from their employee rosters and keep their organizations focused on other tasks.
Less Oversight
Outsourcing payroll means giving up direct supervision of at least some of its many processes. While a client company remains in charge of setting expectations and is compelled to monitor a provider’s success, there’s no real substitute for the level of oversight achieved through managing payroll functions internally.
Finding a trustworthy third-party provider goes a long way, but a company can’t just pass off any payroll mistakes that arise as the fault of its provider and move on. At the end of the day, the company is still responsible for properly compensating its employees, and problems created or left unresolved by the provider will continue to cost time and money until they’re addressed. The client company also remains liable for tax remittance whether or not it has outsourced this particular payroll function, meaning it’s on the hook for any errors even if it’s not immediately responsible.
Decreased Data Security
Perhaps even more concerning is the increased risk of a breach into sensitive data that outsourcing inevitably brings. While many cloud-based programs for payroll data management use encrypted servers and firewalls for security, they are juicy targets for malicious activity.
Data security risks such as these never completely go away, but transferring sensitive information (Social Security numbers, bank account information and the like) outside the walls of the company and potentially across the globe does increase exposure. When a company keeps everything internal, these types of risks tend to go down.
Focus on Provider Reputation and Experience
When choosing a payroll outsourcing provider, it’s important to remember what’s at stake. A good provider will make things easy for the client, but client companies shouldn’t be lured into a false sense of security. Even the best payroll managers are prone to mistakes or data breaches. Take the time to make sure a provider is both trustworthy and experienced to minimize these inherent risks of outsourcing.
Remain Aware of Regulations and Tax Burdens
As mentioned before, these are further areas where a misstep by a payroll outsourcing provider can become a problem for both the provider and the client company. If a company is outsourcing internationally, it shouldn’t assume that it can ignore employment regulations in the provider’s country, as these can be very different from those in the United States. A company should also never assume that all applicable taxes from the payroll process have been successfully remitted by a provider—always double-check that the figures are correct, as the consequences for an error can be costly and will fall entirely on the client company.
Take Your Time
Companies experienced in arranging outsourcing contracts with third-party entities can rely on past experience for guidance. For companies newer to outsourcing, however, it’s worth taking plenty of time to select the right provider and to make sure all other aspects of an arrangement check out.
Outsourcing company functions such as manufacturing processes or customer service might seem like a bigger deal than simply finding a new payroll department somewhere else. Don’t forget payroll fuels a company’s “engine,” underpinning its greatest asset: its workforce. Add to that the sensitivity of the data involved, and it’s easy to see why these aren’t decisions to rush into.
Payroll outsourcing certainly has advantages, but no single resource has the ability to point a company toward guaranteed success with payroll management. Company leaders should not take a decision about outsourcing payroll lightly, but should understand its convenience and financial savings. A solid understanding of payroll outsourcing’s pros and cons, along with accurate information on existing payroll management costs, can offer helpful guidance.
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Is outsourcing payroll cost-effective?
There’s no guarantee outsourcing will be cost-effective, but many companies choosing to outsource find it cheaper overall than keeping payroll management fully in-house. Hiring out the work can, when all goes well, provide significant advantages and cost savings. That said, there’s a huge range in what payroll outsourcing providers charge, and some flexibility in how much of the payroll process they’ll take on, so cost-benefit analyses will vary depending on company goals and budgets.
Is it common to outsource payroll?
Payroll is one of the most commonly outsourced HR functions. According to a 2022 Statista survey , 12% of organizations worldwide fully outsourced payroll functions in the year 2019, while 26% of organizations co-outsourced payroll—meaning they outsourced some (but not all) payroll functions.
When should you outsource payroll?
Processing payroll is time-consuming. Outsourcing payroll will help free up time to focus on your company. If you do not want to outsource payroll, consider using a software to process your employees’ payments and taxes.
How do I find a payroll company?
Companies specializing in payroll outsourcing are often labeled as “payroll outsourcing providers” or “payroll service bureaus.” Others offering broader administrative or HR services including payroll management are identified as “professional employer organizations” (PEOs). The terms “payroll service provider” and “payroll services” are often used to apply to either type of organization. We recommend checking out our 2023 guides for the best cheap payroll services , best payroll services for small businesses and best PEO services .
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Building the business case for outsourced payroll
Uncover the success story of manufacturer AG Barr’s outsourced payroll journey and what else was discussed in this closed-door executive roundtable with HR leaders looking to take their organizations to the next level.
Why You Should Care
Hear why this £200 million company outsourced its payroll for 1000+ employees
Discover the benefits of payroll transformation and why the rewards outweigh the risk
Payroll doesn’t need to be the last bastion of digital HR transformation of organizations today
‘If it ain’t broke don’t fix it’ they say. And that logic is often applied to payroll technology. Changing or replacing your organization’s payroll provider or solution can seem fraught with peril. But in this age of constant change, and with Covid-19 showing us that we need to be ready for anything, doing nothing is now the bigger risk!
Key topics discussed
- Investment in technology and strategies to replace legacy systems that can’t keep pace
- The need for prioritizing the employee experience when it comes to payroll
- Automation and its business benefits
- The relationship between the transformation of payroll alongside time and attendance
- Balancing business continuity and resilience with cost savings and complexity
UNLEASH was delighted to recently host an exclusive roundtable discussion with leading payroll providers SD Worx and guest speaker, Fiona Campbell-Downes, HRBP and HR Services Lead of AG Barr . This FTSE 250 UK soft drinks company are behind many household brands like IRN-BRU, Rubicon and Strathmore. Fiona kicked off the lively session with an insightful overview of their journey to date.
Historically we had outsourced payroll before, but the accuracy wasn’t there which really affected the employee experience. So we knew we needed to make a change with the end user at the heart of it. Our decisions have been about far more than cost savings. We have focused on the purpose of payroll and how its linked to the overall perception and performance of the organization. – Fiona Campbell-Downes, HRBP and HR Services Lead, AG Barr
AG Barr’s approach was to prioritize its payroll transformation rather than leave it to the ‘end’ of other digital HR initiatives, with the employee experience as a key driver. Fiona explained how automation has been an important part of the process. The “calculation engine” as she refers to it is what powers AG Barr’s ability to automate many aspects of payroll – then only have to manually manage by exception. And then she points out, they have been able to interrogate and understand any discrepancies and really maximize their global payroll performance.
The unstoppable rise of automation
Automation was an important part of the transformation of the other HR leaders in the discussion as well. One referred to it as their ‘black box’ that took care of the basic administrative tasks and freed their team up to focus on more transformative and strategic activities worldwide.
Self-service payroll is also an area that has been accelerated by the pandemic, highlighting less “human interaction and more technology interfacin” as one attendee put it. But again, the developments here are very context specific.
Some organizations’ people are ready for these steps – even demanding them – but others still see it as a “big step”. As Fiona commented “we have to take our stakeholders on a journey here” and HR has to factor in when these steps are taken and how they’re communicated internally. Some people will still want face-to-face training or live webinars to talk them through the changes for example. Otherwise you won’t deliver the end-user experience you’ve been hoping for. And the importance of that cannot be underestimated. As one HR leader reflected, “payroll problems can drive attrition if you’re not careful”.
Helping your people understand what’s in it for them and what you’re doing for them – and why – when it comes to their pay, is key to success. It’s our job to adapt to our audiences and make sure the communications are fitting. For me, it’s about creating your purpose, knowing your audience and giving options as to how people want to tap in and access that information. Fiona Campbell-Downes
Compliance remains key
Of course, the business drivers vary from organization to organization, with compliance often at the top of the agenda. There are so many changes in payroll legislation and rules – with the changes around furlough being a high profile recent example – the demands can mean that outsourcing solves that challenge.
Multi-national payroll is also a common driver for transformation and outsourcing. Being able to scale, often quickly, across different countries, and managing the requirements of each can be a full time role (or roles) in itself.
When time and pay are inextricably linked
AG Barr is also transforming its time and attendance technology now too. And the HR leaders were all in agreement about the overlap between time and payroll. Particularly following shift changes and hybrid working in the wake of the pandemic, businesses need flexible contracting and the ability to track and mange time in a much more agile way. This of course impacts pay directly.
The time and attendance transformation is often left until after payroll but the conversation concurred that there were real benefits for it to happen in parallel. Steve Knapman from SD Worx reflected that employee experience is a real driver for the two to be addressed at the same time, with growing requests for drawing down pay on demand.
We’ve moved past online payslips being revolutionary. Now there are new capabilities around simulated pay, pay on demand and the visibility of payroll as a whole. Which again, drives the building of a business case for transformation and outsourcing. Getting beyond traditional payroll reporting and moving towards a more analytical approach, forecasting, understanding trends, seeing where organizations can reduce costs – these are real bottom line benefits for businesses as they look at reducing costs and streamlining operations. Steve Knapman, Enterprise Payroll Specialist, SD Worx
Elevating the position of payroll
And this is where the opportunity for payroll to be seen as a more transformative and strategic function comes in. There are a number of conversations that we have hosted and been part of at UNLEASH with payroll leaders from around the world and they are all in agreement. The advances in technology are taking the function beyond the transactional – which it is automating – to the top table conversations in the organization.
The pandemic has thrust payroll into the spotlight and we’re seeing the market for payroll solutions and outsourcing grow exponentially. Organizations like AG Barr are showing how integrated, outsourced solutions are creating more powerful employee experiences and creating analytics and dashboards that are driving real business decisions. This combination of efficiency and effectiveness makes it a very exciting place to be, especially with the right partner – and plan – in place.
Join us for our next payroll roundtable discussion here with more conversation on this business critical topic! Meet your HR and payroll peers in a privileged and private online setting. Full details here.
Why join an UNLEASH Roundtable?
Amid the current disruption, HR leaders need to get ahead of the exponential trend where work, technology and how work gets done have changed forever. But how should we approach the relevant questions, given the radical uncertainty we continue to face as the pandemic becomes more protracted than anyone imagined? Our exclusive Virtual Roundtables are designed to explore where business leaders are focused now, key challenges and prioritization for the rest of the year, and what matters most in planning for what’s next.
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Apply to get a seat at future UNLEASH Roundtables via our Events Calendar today. Please note that all attendees are screened. Your company name will be shared with other participants to help us create the most useful discussion possible.
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How organizations can prepare for the payroll of the future
Ernst & Young Global Ltd.
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2019 global payroll survey full report (pdf), 2019 global payroll survey at a glance (pdf), the 2019 ey global payroll survey revealed that organizations with a formalized payroll strategy indicated more advanced payroll operations. .
T he 2019 EY Global Payroll Survey examined how organizations are addressing payroll trends through the lens of payroll strategy component. Thanks to the participation of 128 respondents, the 2019 survey results provide additional insights on how companies can prepare for the payroll of the future and understand which steps can further enhance the function. As you review this survey report, you can compare your payroll operations with this data and spark better questions to continue driving value in your organization.
In 2019, social, economic and geopolitical disruption continued to shape how companies determine their overall business strategies, including how payroll operates across the globe, while remaining cognizant of challenges and risks, as well as how to invest to improve payroll operations. The 2017 survey explored how companies were preparing for payroll of the future, and the results showed trends in advancing the payroll function as a strategic business partner, specifically:
- Moving payroll back in-house
- Incorporating payroll into expansion plans earlier in strategic corporate discussions
- Digitalizing upgrades to payroll processes
Service delivery and operating model
Defined service delivery and operating models are critical foundations for the payroll function.
A critical success factor for an effective payroll strategy often begins with the determination of a service delivery model. Often, HR and payroll strategies are linked due to data integration, desire for a positive employee experience and overlapping processes. Among survey respondents, 57% indicated that payroll reports to HR (to be further discussed in the organizational structure section below). Survey respondents reported the number one priority for HR is to redesign the HR operating and service delivery model.
On a similar question, 60% of respondents indicated they agreed or strongly agreed that a truly global payroll delivery model would bring significant benefits to their organization. With both HR and payroll requiring effective delivery models, it is crucial for payroll and HR to be in lockstep so that design strategies complement and enable one another.
A service delivery model can be composed of many delivery vehicles that may include insourcing activities, outsourcing and managed services, co-sourcing or shared services. One consistent service delivery finding is the shift of payroll operations back in-house, with a 7% increase from 38% in 2017 to 45% in 2019. Looking all the way back to the original survey in 2013, the shift back in-house has increased from 28% to 45%, almost doubling the percentage of those who choose to service their payroll operations internally.
A deeper analysis reveals the shift is more relevant for organizations with a headcount smaller than 10,000; organizations with an employee population of more than 10,000 still favor the co-sourced model. Additionally, those with a formal payroll strategy slightly favor outsourced and co-sourced solutions as compared to those without.
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The period from 2017 to 2019 did not show significant change as to which payroll processes are outsourced versus insourced. Core data management tasks such as collecting variable pay, maintaining the HR system of record and time, and managing attendance/workforce management are the top processes for insourcing. Post-payroll processes, tax and garnishment processing remain on top of the outsourcing list. Two key changes indicate that organizations are shifting their approach in service delivery back in-house:
- Gross-to-net payroll processing
- Third-party payments to in-house operations
Regardless of service delivery archetype, 66% of respondents indicated they would not want to change from their current model in place, a 6% decrease since 2017 graph displayed in survey results preview. Overall, the number of respondents who agree with their choice in current service delivery model did not change significantly from 2017 to 2019.
Even though organizations may choose to keep their existing service delivery model in place, participants who outsource in 2019 indicated their top method to improve operations via outsourcing would be to select different services but remain with the same vendor (27%) as compared with 31% in 2017. In 2019, 19% also indicated they would choose to move forward with different services and a different vendor, a 12% drop since 2017. The two year span between iterations of the 2017 and 2019 survey indicated a slight change in participant choice to improve outsourcing through services rather than vendor realignment.
Another critical aspect in successful payroll delivery is the standardization of processes put in place to support the chosen operating model. Forty-three percent of respondents shared that their organization has very low or limited process standardization in payroll. The rate of standardization decreases for larger and more global organizations. The data does show an uptick in standardization of processes for companies with a formal payroll strategy as well as for those who outsource portions of their payroll operations.
Overall, this year’s responses indicating 32% of organizations have very high or full standardization is a positive driving force, which can significantly impact payroll operations for the better. Process standardization is an important aspect of the overall payroll strategy, one that can significantly enable the service delivery model to be more effective.
Organizational structure
Payroll reporting alignment can impact how strategic initiatives are actioned.
While the service delivery model is a crucial and foundational component of a payroll strategy, another key factor in structuring the payroll organization is the use of shared services.
The decision of how to structure payroll operations is largely dependent on the organization’s geographic footprint. When asked, survey participants indicated that the top areas for adding employee headcount were North America, Asia and Europe. As expansion continues, payroll must also shift or add resources to administer in new markets. Companies must determine the most effective and efficient use of resources, such as enlisting the support of external providers, hiring or transferring payroll resources and creating or further developing a shared services location.
Despite the close alignment of HR and payroll strategies, only 58% of companies with a payroll function reporting to HR have a formal strategy in place, as compared to 78% with payroll reporting to finance. Reporting alignment can have significant impact on the implementation of key payroll decisions. Often, payroll choices fall in line with the governing function to which payroll reports, swaying the strategic direction of operations significantly. Similarly, competing or related priorities may hinder or benefit the timing and pace in which payroll initiatives are implemented. Perhaps this explains one interesting 2019 survey result: while 57% of respondents report to HR, only 49% actually believe payroll should report to HR.
A final consideration for the organizational design in payroll involves the makeup of the payroll team. While not a top three challenge overall, finding the right payroll talent was selected by 18% of survey respondents as the number one challenge in payroll operations. Resources must be selected with many factors in mind: technology know-how, ability to adapt to changing business requirements, staying up to date on the latest legislation for the region supported and compatibility with other team members.
Many participants shared they would address the payroll talent need at the local level, if at all. However, given the increasingly global nature of companies in today’s landscape, reviewing payroll talent at the global level allows organizations to make effective decisions to service payroll operations with leading-class resources in the right roles.
All the while, consideration must be given to the structure of the overall team and resource bandwidth as payroll improvement projects are undertaken while delivery of regular payroll must be maintained. A potential solution for limited bandwidth or payroll knowledge often is to hire external support to deliver or assist on certain components of payroll delivery.
Vendor governance
Vendor satisfaction remains stagnant, but strong governance methods improve vendor results.
Vendor governance is one of the most critical components of a global payroll strategy, impacting several aspects of service delivery for those who outsource or co-source their payroll operations. While payroll professionals must partner with providers to effectively process payroll, 32% of respondents in 2019 found that conducting business with payroll providers is difficult, a 13% increase since 2017.
Conducting business with payroll providers
Percentage of respondents who found it difficult to conduct business with payroll providers.
A new section was added to the 2019 survey, asking each participant to rank all known vendors in several categories. Providers collectively received the lowest ratings in the areas of: cost, ability to deliver on their business cases, ability to satisfy the value proposition, ability to deliver and be viewed as a strategic payroll advisor.
Collectively, results show providers rated fairly well on concepts related to day-to-day delivery (e.g., ability to deliver and geographic capability) compared with those demonstrating strategic value (e.g., business case, value proposition, strategic payroll advisor).
Collectively, several vendors (ADP, Ascender, BDO, Blue Marble, Ceridian, CloudPay, Neeyamo, NGA, Oracle, Safeguard, SAP, SD Worx, TMF, Ultimate and Workday) were rated according to the categories below:
The search for a single vendor that can address payroll needs globally remains elusive. Forty-five percent of respondents said they do not believe there is a single vendor who can handle all their payroll needs globally, a 13% increase since 2017. However, there was also a 10% decrease (from 78% in 2017 to 68% in 2019) in respondents saying they thought it was fairly/very important to achieve global payroll delivery through a single vendor. The results remain consistent according to region and size, and regardless of whether the organization has a formal payroll strategy.
What is creating the disparity between company’s desire for a single payroll vendor and their inability to find such a provider? Based on the responses to the survey, it appears many payroll professionals still desire to consolidate operations to one vendor, but confidence about whether such a vendor even exists has eroded in recent years. The insights gained from companies across industries and market sizes indicate there are numerous factors for why leveraging a single vendor may not be possible: local legislations and language barriers, single vendor product capability across global geographies, existing contractual obligations due to strong vendor relations and potential cost savings. For these reasons, many organizations choose to utilize a multiple-vendor model to fulfill their global payroll needs.
Alternatively, the continued finding that some companies are moving payroll operations back in-house may provide another option for organizations to serve as their own perceived global payroll provider. However, operating internally as a global payroll provider does not come without risks. Training and developing payroll talent to track legislative changes and maintain compliance become potential challenges without enlisting the support of external vendors.
When asked about payroll provider performance, respondents indicated that areas of heavy dissatisfaction included strategic partnership, service-level agreements (SLAs), problem resolution and cost. At second glance, the rates of dissatisfaction are reduced with a formal payroll strategy.
Due to the significant perceived lack of single-provider capability shown within this report, organizations are pushed to implement a payroll strategy that focuses on components within their control. Improving the interaction with multiple vendors can include creating standard processes to be applied consistently across providers, establishing clear SLAs up front for each provider to follow, maintaining a strong governance team to interact with each vendor and gathering metrics to track performance over time. The criticality of leveraging the right mix of vendors based on an organization’s payroll strategy then becomes apparent to improve the vendor management relationship, lower cost and partner with providers to deliver on the proposed value proposition.
Whether service delivery is being addressed through a provider or internally, technology can help or hinder the success of payroll operations.
HR Transformation
From employee health and safety to exceptional people experiences, the boundaries of HR are shifting in real-time. HR teams must migrate from the services that have defined HR historically to the new people services that will define the function for years to come.
Technology and data
Cloud-based solutions and AI gain momentum in the payroll space.
While implementation of new HR technologies and digital tools is not the top priority for organizations in 2019 (as compared with results from 2017), technology remains a major component of the overall payroll strategy.
Respondents were asked if their organization’s human capital management (HCM) platform in use was an on-premise or a cloud-based solution (a new question added in the 2019 survey), and not surprisingly the results show cloud-based HCM platforms have gained momentum in use among survey respondents, with 55% stating that they have a cloud-based HCM platform (with an even higher rate of response from those with a formal strategy in place).
Cloud-based platform adoption may be attributed to several factors: insourced payroll operations are more common, using cloud-based solutions due to the retiring of legacy on-premise platforms, lack of satisfaction with payroll provider value proposition and greater ability of providers to deliver out-of-box solutions that meet company needs without heavy customization.
Benefits offered by cloud-based products include shorter implementation life cycles and cost savings, but these products often require organizations to standardize their processes so that operations are enabled using these platforms. While cloud vendors have historically targeted smaller and mid-market companies, they have expanded capabilities to meet the needs of larger clients, which may mean the trend will continue.
Payroll can be enabled not only through HR and payroll technology platforms, but also through other digital solutions. Automation remains a top payroll service delivery challenge as companies continue to invest heavily in emerging technologies, with a high percentage of surveyed organizations either using or planning to use intelligent automation and chatbots for payroll processing and interaction with employees.
Finally, as operations are streamlined via the payroll strategy components mentioned thus far (service delivery and operating model, vendor management and technology), increasingly companies are further investing in the employee experience.
Employee experience
Payroll is taking an active role in driving a positive employee experience.
In 2019, a survey section was added regarding employee experience, as companies have previously shared their challenges with driving a positive employee interface with payroll. As payroll leaders continue to evolve their strategies both in foundational improvements and innovative solutions, organizations have also begun to view payroll as a more integral component of the overall employee value proposition.
Many organizations are considering the implementation of an inquiry management system to enhance employee’s ability to log and track their questions to payroll and HR (among other functions). In 2019, respondents said shared mailbox is the most commonly used medium for inquiry management, followed by phone line to payroll and case management system. Implementation of a case management system can improve the efficiency and accuracy of responses to employee questions while improving the user interface with these functions.
Those with a payroll strategy in place are more likely to use preferred employee inquiry management methods such as case management system and call center as well as less likely to use shared mailbox and phone line to payroll.
Organizations with payroll strategy are considering the employee experience more and more by focusing on these tools, which directly impact the end user.
Another contributing factor that can impact the employee experience is the use of self-service functionality; when asked, survey respondents indicated self-service functionality was the number one selection criteria when choosing a new time and attendance and workforce management system and third highest HR priority overall. In addition to recent technology releases via enhanced mobile applications and improved off-the-shelf provider offerings, employees can own and interact with their HR and payroll data more than ever before. This improves both employee engagement with core internal functions as well as employee and manager ownership to enter data accurately and in a timely manner for effective downstream impacts.
As employee engagement continues to be remedied through new ways of payroll service delivery, innovative practices are generating a lot of interest. Many organizations have begun to request more information regarding the rollout of on-demand pay, and as a result, there was a survey question on the topic in 2019. Only 9% of respondents indicated they are utilizing on-demand pay, which allows individuals to be paid for hours worked before the standard payday. As the payroll function continues to evolve, pay flexibility may serve as a talent attraction and retention mechanism. However, there are cost factors and important regulatory and tax considerations, which may explain the lack of adoption thus far.
Final thoughts
Overall, 65% of companies responding to the survey indicated they have a formal strategy in place. In light of the complex decisions that must be made with each aspect of payroll operations, it is increasingly clear that there is a need for formal payroll strategies to be put in place. Companies often struggle to plan HR and payroll transformation when their challenges include organizational changes, impending technology retirement, limited budget and time constraints. In many cases, companies must evaluate their service delivery models, update their processes and implement new technologies simultaneously. For this reason, EY professionals encourage clients to understand the goals of their future state payroll function, develop a strategy and plan, and act accordingly. Due to competing priorities, a strong program management team and implementation plan must be put in place to effectively deliver transformative changes.
Our survey found organizations with a formalized payroll strategy indicated more advanced payroll operations. Cloud-based solutions and AI are gaining momentum in the payroll space. Vendor satisfaction remains stagnant, but strong governance methods improve vendor results. Lastly, payroll is taking an active role in driving a positive employee experience.
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Case Studies: Payroll | 5 firms share how they’ve made payroll a unique part of their practice
- Accounting & Bookkeeping
With accounting firms adding payroll as a value-added service or spinning off whole practices to address their clients’ payroll-related needs, the market for customizable payroll solutions is expanding. The solutions and services these firms choose to adopt are often client-dictated, ranging from small-business-focused internal software to enterprise-level outsourcing.
We spoke to five firms about how they are growing their payroll business through five different providers.
The right fit
Firm: Bookkeeper360 Users: 30-40 clients Product: Gusto (formerly ZenPayroll) Commencement date: 2014 On record: Founder and CEO Nick Pasquarosa
While still in the process of ramping up the solution for clients, bookkeeping and accounting firm Bookkeeper360 began recommending Gusto after the payroll provider added more attractive features like workers compensation and health benefits and became available in more states. Bookkeeper360 partners with ADP for larger clients, but in its year-long relationship with Gusto has found it to be a good match for a specific kind of client.
Bookkeeper360’s two payroll partners serve “two different clients,” Pasquarosa said. “The much bigger clients are not a fit for Gusto, and those clients are on ADP. Small business, pre-revenue clients are a great candidate [for Gusto].
”With those clients, usually 20 employees or less, the implementation process is all online, “super simple,” and aided by Gusto’s “great support,” Pasquarosa shared. The average set-up time is a day.
Gusto’s customer support is especially useful when clients have issues or need anything expedited. Pasquarosa also touts its usability: “It’s extremely easy for small-business owners to understand and use. It works great on mobile. It’s not the whole complex payroll set-up but uses layman’s terms … you don’t need a four-year degree in accounting to understand it.”
From clients, “the biggest complaint is funding time,” though Pasquarosa said Gusto is working on improving cash flow to compete with the likes of ADP, which provides next-day funding. The company is also addressing other concerns, like the complications of multiple pay rates and pay structures, and “reimbursements can be a little cumbersome.” But Bookkeeper360 has a “really good relationship with Gusto. They’re open to hearing feedback.”
Bookkeeper360 will continue to build their core marketing around the Gusto service, which will include partnership cobranding. The firm also aims to streamline the client onboarding process.
Tremendous resources
Firm: KLR Users: Hundreds of clients using ADP, 12-36 using ADP TotalSource Product: ADP TotalSource Commencement date: 2000 On record: Shareholder and director of emerging business Henry Silva
While Top 100 Firm KLR has had an exclusive relationship with ADP for at least 15 years, they’ve been referring clients to ADP’s TotalSource human capital management services for a few years now, through their use of ADP’s Accountant Center portal. A dedicated ADP service representative works with KLR through the referral process and then with clients using the service.
“Why it works so well is, whenever we have an issue with any client, we pick up the phone and call one person, and he takes care of it,” said Silva.
Advantages: While “you can’t find [that dedicated customer service] at any other payroll company,” according to Silva, “the key, to me, is the portal.” In addition to facilitating the referral process, the portal “provides a tremendous amount of resources at our fingertips” including non-payroll-related services like webinars providing CPE and “real topical” information on the Affordable Care Act and compliance and reporting requirements.
Any concerns KLR has with ADP are typical of referral relationships, according to Silva. They also vary by client, with ADP providing options tailored to their specific needs.
KLR plans to “continue doing what we’re doing” while also expanding their client base and ADP offerings.
In their corner
Firm: Bullock & Associates PC Users: A portion of their clientele, representing a small percentage of Bullock’s growth revenue Product: Paychex Commencement date: Before 2006 On record: Principal Lisa Baker
Tax, accounting and business consulting firm Bullock advises on payroll as a value-added service, recommending Paychex as an outsourced solution for clients. In many cases, the firm will advise small-business clients that are about to open a business on payroll procedures. “Some want to do it on their own, and we discourage that,” Baker explained. Instead, the firm gets those clients in touch with their Paychex representative.
Once clients are set up on Paychex, Bullock is confident in the payroll, human resources and benefits services the company provides. “When payroll is done correctly, there are no issues later,” Baker said. “The other key thing is there is so much complexity with employees, the Affordable Care Act, benefits, retirement—[with Paychex] it’s all in one place.”
Paychex’s outsourced solution also operates as an educational tool, providing information that’s outside Bullock’s scope. “As issues get more complex, especially with emerging laws, we really suggest they go to someone who knows what they’re doing,” explained Baker. “With the Affordable Care Act, we don’t want to focus on that; it’s not our core business. But we want them to have someone in their corner.”
Any issues have arisen from clients being assigned a Paychex representative they didn’t find to be a great fit. On those rare occasions, the firm has found another rep to work with the client.
Bullock will continue recommending Paychex, counting on the payroll provider to continue offering expertise on changing legislation and working with them to answer client questions.
‘It’s really easy’
Firm: Prominent Payroll Users: 250 clients Product: AccountantsWorld Payroll Relief Commencement date: 2010 On record: Director of business development Joshua Jones
Payroll provider Prominent Payroll, which shares ownership with CPA firm BeanCounters Tax & Accounting Services, has been advising clients on Payroll Relief since it opened its one-stop shop in 2010.“It’s really easy,” shared Jones, who also serves as president of BeanCounters. “We get clients’ EIN numbers and bank information, there’s a form the client has to sign, and they get sent over to Payroll Relief. Within a week, everything is up and running.”
The bank integration is the “selling point for us,” Jones explained. “We don’t want to go through the process of the banking side of things,” including bank fees and other administrative concerns.
Jones said the majority of his clients are transitioning from enterprise-level solutions. His clients range from small businesses of one to two employees up to companies of 500, though Prominent Payroll is “seeing a large push on the larger size.” But even with large customers, Payroll Relief still operates as a back office, while Prominent Payroll is client-facing and service-driven.
In terms of functionality, Jones appreciates Payroll Relief’s ability to handle multiple locations and the different accounts attached to those locations. The solution also boasts hundreds of different pay categories.
Any problems Jones has with Payroll Relief are addressed by AccountantsWorld. When, for example, a 401(k) match wasn’t calculating correctly, the company added a new field to determine the correct start date.
Prominent Payroll will keep expanding its client base, which it typically does through referrals — via client recommendations, BeanCounters’ cross-selling, and the referrals of local agents selling workers’ compensation. Payroll Relief’s flexibility means Prominent Payroll is not “cutting out local agents like the national competitors would,” according to Jones.
Heroes and czars
Firm: Sharp Payroll Users: 170 clients Product: Apex Employer OnDemand and Apex Employer On the Go Commencement date: 2011 On record: President Joe Sharpe
Sharp Payroll was spun off as a division of the family-owned accounting firm Total Income Tax four years ago, and while it benefits from that co-location and access to tax clients, Sharpe still made a big marketing push to grow from a dozen clients to 170.Sharp Payroll, with a staff of four people, has a “payroll wizard” who sets clients up on Apex, either hands-on or through screen-sharing, where he will file their returns. Each account is then assigned one of two “payroll heroes” that input clients’ key information. Sharpe serves as the “payroll czar.”Clients will use either Employer OnDemand or Employer On the Go, slightly different platforms that still share the same data with views clients can be switched between. Employer On the Go is more intuitive and smartphone-optimized, while OnDemand offers more complexity for larger clients.
Sharpe especially likes Apex’s ability to integrate with third-party providers of benefits, time-keeping or tax software, sharing critical data important to both employers and employees. Both parties can view that information on a sleek interface.
“Lately, the look and feel of the product really jumps out to the end user — and not even just the end user, the employers and at the employee level, improving the level of interaction between employee and employer.”
“We use it in our office a lot and I love it. It shows benefit statements, the taxes the company has paid, other benefits — it’s shown in a graphical manner that’s very easy for employees to see,” Sharpe said. “And you can upload pictures and documents in the system. It’s a good way for HR managers to assign tasks to employees or send documents, with a message like, ‘Please sign this new confidentiality agreement.’”
While Sharp Payroll had minor complaints in the past, “The product that came out in the last 12 months answered any challenges we had on the sales end,” reported Sharpe. Electronic time-off requests, for example, were one big client need that Apex has since added to the platform.
Sharpe is following the ACA closely to determine what that will require of his practice: “We have the groundwork laid and the software we need, but no one has any experience in it yet; no one’s filed any returns yet related to the Affordable Care Act. That will be the challenge for us in the last quarter of the year moving into 2016.”
Read the original article here: Accounting Today Payroll Case Studies
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Unilever Outsourcing
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Lerne mit deinen Freunden und bleibe auf dem richtigen Kurs mit deinen persönlichen Lernstatistiken
Nie wieder prokastinieren mit unseren Lernerinnerungen.
If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.”
– Lee Kuan Yew, Former Prime Minister of Singapore
In 1930, Unilever was established from the merger of two organisations, Lever Brothers, which was a British manufacturing company, and Dutch Margarine, a Dutch company. From that time onwards, Unilever has expanded into 100 countries globally. It produces a wide range of consumer goods. Unilever has become one of the most adaptable consumer products industries, with P&G as its sole rival. Among many other organisations, Unilever has also outsourced to different regions globally. Let's look at Unilver's outsourcing strategy!
Unilever outsourcing success story
Unilever’s products are sold all over the world. 2.5 billion people buy its products every day. An organisation that launched a single soap brand has emerged as one of the biggest global consumer brands, offering products in beauty & personal care, home care, and food. Here are some statistics that show Unilever's global dominance:
A turnover of €51 billion in 2020
It has around 400 brands under its umbrella
Networking with 25 million retailers
There are 90,000 factories globally
Global reach in 190 countries
150,000 employees in its workforce worldwide
There are multiple reasons for its success, including innovative strategies and excellent management , to efficient marketing and sustainability. Let's take a look.
Unilever's outsourcing strategy
Outsourcing is the practice of hiring another party outside of the organisation to perform services or produce products that were originally performed within the organisation.
The different types of outsourcing include:
Professional outsourcing: contracts are offered to individual specialists to manage multiple small tasks without having to outsource the whole function.
IT outsourcing means employing outside service providers to efficiently provide IT-related business processes and infrastructure solutions for organisation outcomes.
Manufacturing outsourcing is when the production process is undertaken by another organisation that specialises in manufacturing that product.
Process-specific outsourcing is when an organisation contracts a provider for a specialist service that may be niche.
Operational outsourcing is when an organisation hires other contractors to handle specialised work operations. This can be for their HR, accounting, data analysis, and administrative functions.
Unilever applies operational outsourcing with Accenture to manage its HR function. Organisations employ outsourcing to lower labour costs which include salaries, equipment and machinery, overheads, and technology. Organisations also use it so that they can concentrate on the core aspects of the organisation and outsource less crucial operations to external parties.
One of the major reasons for outsourcing is cost reduction. Money can be saved by outsourcing because producers who supply the same service to several customers can take advantage of 'economies of scale'. In addition, outsourcing can boost an organisation’s access to a range of experts. Many organisations have insufficient resources when it comes to rapidly changing technologies and systems.
Unilever implements a four-step method to outsourcing:
Prioritise: this is to determine which functions need outsourcing, nonetheless making sure that the areas of strength and major competencies stay within the organisation.
Select: d efine criteria for selecting a provider and take into account the correspondence between the values and philosophies of the two parties.
Trust: b uilding trust via clear communication between parties.
Monitor: m ake sure that assessment measures are in place for monitoring the success of the function that is outsourced.
Here is an example of Unilever’s human resource development outsourcing .
Prioritise: Unilever determined that its human resource (HR) function can be partially outsourced, as this would benefit the company.
Select: Unilever outsourced its human resource function to an external provider, Accenture. It may be reasoned that an organisation of the magnitude of Unilever should develop its own economies of scale with an in-house human resource development function. However, the strategy behind this could be to outsource a non-value-adding activity (ie. administration) to an external provider so that the organisation can focus on the core competencies to market and sell its brand.
Trust: Unilever acknowledges that close interaction between the in-house and external HR functions is needed in order to make the collaboration work. Joint employee meetings take place regularly. The measures taken are to develop trust, which is the foundation of a successful outsourcing arrangement.
Monitor: Regarding the assessment measures, there is a detailed structure to oversee the services provided by Accenture at the domestic as well as international levels.
Unilever and Accenture
Organisations today deal with globalisation, quick changes in technology and increasing complications of products/services. Because of this, it is hard for organisations to have in-house expertise . Unilever faced a similar issue as it is tough to enhance competitiveness, deliver distinctive functional excellence, and develop an efficient cost structure. Therefore, it did not have adequate expertise and time to concentrate on administrative activities, which makes it hard to stay competitive.
Organisations usually want to emphasise their core competencies . For this reason, Unilever has outsourced its global HR operations to Accenture.
There are benefits to be gained from outsourcing . It permits the organisation to share not only the fixed cost but also the risks linked to the development of a product or technology, the organisation can concentrate on its main competencies while getting access to corresponding competencies from the company they are outsourcing to. Consequently, the organisation can lower costs and boost revenues from outsourced operations.
Accenture is a worldwide management , consulting, technology services, and outsourcing organisation.
Unilever believed it was best to put all of its efforts into its core competencies , such as product development and acquiring new companies.
Without outsourced HR, it would have to solve the issues internally, which would split its focus. In addition, they would have to use more time to train staff and keep up with technological change.
Besides the advantages, there are also threats associated with an outsourcing relationship like this one. One drawback is that influential customers may exploit suppliers, and at times influence them to reveal classified information. Moreover, the success of the outsourced operation is only possible when cooperation with the supplier is efficient. Other drawbacks include security risks, reduced quality control, loss of control, and communication issues.
Unilever has expanded from developed markets to developing markets. It is using an outsourcing approach to lower the cost of production. It produces brands that fulfil the expectation of its customers through design, taste, nutrition value and hygiene, providing exactly what the customer needs.
Unilever Outsourcing - Key takeaways
Unilever was established when two organisations merged, Lever brothers which was a British manufacturing company and Dutch Margarine from Holland.
Unilever has grown into 190 countries globally with over 400 brands under its umbrella.
Unilever has emerged as one of the biggest global consumer brands, offering products in beauty & personal care, home care, and food.
Outsourcing is the practice of hiring an external party to perform services or produce products that were originally performed within the organisation.
Organisations employ outsourcing to lower labour costs, which include salaries, equipment and machinery, overhead, and technology.
Unilever implements a four-step method to outsourcing: prioritise, select, trust, and monitor.
Reasons for outsourcing include globalisation, rapid changes in technologies, and lack of expertise within an organisation.
Unilever has outsourced its global HR operations to Accenture.
The benefits of outsourcing are that it permits the organisation to share not only the fixed cost and risks linked with the development of the product and technology. The organisation can concentrate more on its main competencies, and get access to corresponding competencies.
The drawbacks of outsourcing are that influential customers exploit suppliers and at times influence them to reveal classified information. Lack of coordination can have detrimental effects.
Emerald, https://www.emerald.com/insight/content/doi/10.1108/09670730910929369/full/pdf
Cascade, https://www.cascade.app/strategy-factory/studies/unilever-from-soap-manufacturer-to-multinational-giant
Accenture, https://www.accenture.com/_acnmedia/accenture/conversion-assets/dotcom/documents/local/ja-jp/pdf_2/accenture-cgs-unilever-sirius-final.pdf
Frequently Asked Questions about Unilever Outsourcing
--> does unilever use outsourcing.
Yes, Unilever uses outsourcing. Unilever uses operational outsourcing in partnership with Accenture to manage its HR function. Unilever implements a four-step method for outsourcing: prioritise, select, trust, and monitor.
--> What is Unilever's growth strategy?
Unilever's growth strategy includes the use of outsourcing to expand into a variety of markets. Through outsourcing, the organisation can lower its costs and the risks linked with entering new markets, as they benefit from access to local knowledge via their partners. The organisation can concentrate on its main competencies while getting access to corresponding competencies from the company they are outsourcing to.
--> What is Unilever's competitive advantage?
Part of Unilever's competitive advantage includes its outsourcing strategy. By using an outsourcing approach, the company manages to lower production costs. Through outsourcing, Unilever can also focus on its core competencies, like product development and the acquisition of new companies.
--> What are the different forms of strategic outsourcing?
The different forms of strategic outsourcing include professional outsourcing, IT outsourcing, manufacturing outsourcing, process-specific outsourcing, and operational outsourcing.
Final Unilever Outsourcing Quiz
Was Unilever a merger?
Show answer
Unilever was established due to a merger of two organisations Lever brothers which was a British manufacturing company and Dutch Margarine from Holland.
Show question
Which year did Unilever have a merger?
How did Unilever start?
Unilever was launched with one soap brand initially has emerged as one of the biggest global consumer brands, offering products in beauty & personal care, home care, and food.
Define outsourcing.
Outsourcing is the practice to hire another party out of the organisation to perform services or produce products that were originally performed within the organisation.
Why do organisations outsource?
Organisations employ outsourcing to lower labor costs which include salaries, equipment and machinery, overhead, and technology. Organisations can also focus more on their core competencies instead of administrative functions.
What are the main elements of outsourcing?
Usually cost, capacity and competencies are the key components that provide the drive.
What benefit did Unilever have from outsourcing?
One of the benefits was that outsourcing boosted Unilever’s access to a variety of experts. Many organisations are deficient in internal resources to be ahead of rapidly changing technologies and legal systems. Hence, Unilever outsourced its administrative operations.
Who is Unilever’s outsourcing partner?
Its global human resource function is managed by Accenture.
What does Accenture do?
Accenture is a worldwide management, consulting, technology services, and outsourcing organisation.
Which Unilever’s operations does Accenture deal with?
Human resource function
What is Unilever’s method to outsource?
It has a four-step method: prioritize, select, trust, and monitor.
How many brands does Unilever have?
It has around 400 brands under its umbrella.
What are the benefits of outsourcing?
The benefits of outsourcing are that it permits the organisation to share not only the fixed cost and risks linked with the development of the product and technology. The organization can concentrate more on its main competencies, and get access to corresponding competencies.
What are the drawbacks of outsourcing?
The drawbacks of outsourcing are that influential customers exploit suppliers and at times influence them to reveal classified information regarding their costs. Lack of coordination can have detrimental effects. Other drawbacks include security risks, reduced quality control, loss of control, communication issues, etc.
In how many countries does Unilever operate?
It has a global reach in 190 countries.
- Organizational Behavior
- Business Development
- Nature of Business
- Introduction to Business
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Case Studies
Here are some success stories of companies that have achieved success with the business outsourcing services and U.S. market entry support services provided by POSI.
- Tax & CPA Services
Accounting for Company Closure and Reestablishment
- Accounting & Payroll Outsourcing
Expatriate Payroll Processing
Accounts Payable (AP) and Accounts Receivable (AR) Accounting
Accounting for Manufacturing and Business Expansion
With limited staff time, Resources and Technology
Payroll and HR Process Improvement
- Expanding Business to the U.S.
Virtual Office Support
Professional Outsourcing Solutions, Inc.
970 W. 190th Street, Suite 920 Torrance, California 90502 (310)243-1100
© POSI Professional Outsourcing Solutions, Inc. All rights reserved.
The Case for Outsourcing Payroll
Processing payroll in-house can be expensive and time-consuming. It requires on-going recruitment and training of payroll specialists, buying and maintaining payroll software, and safely storing and managing payroll records. Whether it be the federal government’s Phoenix pay system (estimated to eventually cost taxpayers over $1 billion to implement) or one of many smaller payroll systems, it is important to recognize the full cost and risks that in-house payroll can impose on organizations.
Studies have shown that outsourcing the payroll function is more efficient and less costly than processing payroll in-house. A PwC Whitepaper, Exposing the hidden costs of payroll and HR Administration – A total cost of ownership study , concluded that outsourcing payroll leads to cost efficiencies. This research study found that organizations outsourcing payroll spend 43% less on average than those administering payroll in-house.
Below is a list of some of the advantages of outsourcing payroll:
- Labor savings related to processing payroll. Avoid need to recruit and train payroll specialists, or arrange for coverage. On-going training for payroll staff can be costly
- Access to payroll expertise. Outside payroll specialists are experienced in a multitude of payroll issues. Payroll tax rates, rules and regulations can be very complex and are continually changing. It is a payroll provider’s business to stay on top of these changes
- Ensure tax and reporting deadline compliance. There can be significant penalties for making late remittances to the government, or miscalculating payroll deductions. Payroll companies can offer a guarantee that payroll will be done properly, avoiding fines and excess labor costs. There is also likely to be less risk of hardware and software failure using an outsourced payroll provider than relying on in-house systems
- Inherent scalability. Outsourced payroll cost is directly related to number of employees
- Staff can focus attention on your core business rather than on payroll
- Removal of payroll liabilities (e.g. wages payable, payroll taxes) from the organization’s books. This means fewer accounts to reconcile and a cleaner balance sheet
- Banking fee savings. Payroll provider makes deposits to employee bank accounts
- Data security. A payroll company is likely to have more robust IT security and controls in place than what you can afford to maintain. They can ensure that only authorized personnel have access to confidential payroll data, and that payroll records are retained for the required period of time
Find out more about payroll outsourcing – call me and we can have a conversation. We can also talk about improving operating efficiency, reducing costs and strengthening your organization. Reach me at 613-727-1230 ext. 212 or [email protected]
Richard MacNeill
President, OTUS Group Holding Certified Management Accountant (FCMA), Chartered Professional Accountant (FCPA) and Certified Management Consultant (CMC) designations, Richard is also a graduate of the British Columbia Institute of Technology, holding a diploma in Computer Programming and Systems Technology. Outside of work, Richard enjoys spending time with his wife and three children, and training for obstacle races.
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Payroll case study: Workrate
by bespokehr | Oct 19, 2021
Payroll outsourcing: Workrate is a security company that supplies security solutions and compliance for data centres. In April 2021, it acquired 100 new staff to its UK business who work in secure locations on behalf of customers.
The challenge.
Workrate staff were originally managed by an outsourced provider who handled all aspects of their employment. However, since TUPE-ing over and becoming employees of Workrate; this task also had to be brought in-house.
This wasn’t straightforward; new staff were on varying contracts, working different shift patterns with varied terms and conditions. In addition, some staff were paid monthly salaries whilst others were paid an hourly rate. This presented a challenge for the team in calculating the various pay and deductions each month. Workrate needed to find an efficient payroll solution to handle both the calculations and processing of pay for all employees.
The solution – payroll outsourcing
Workrate turned to Bespoke HR for payroll outsourcing and take away the considerable administrative burden of calculating pay each month.
The team now supplies details of each employee, rate of pay and the hours worked. Bespoke HR then calculates their pay, deductions (including tax, NI and pension), HMRC reporting, processes BACS payment and supplies pay slips.
Craig Pickard, Managing Director UK at Workrate, said: “Calculating payroll accurately for a large number of employees all working different shift patterns is a major task. Outsourcing this process has given us peace of mind and freed up valuable resource within the business. The service operates like clockwork and we have peace of mind that deductions and reporting are accurate and made on time.”
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Outsourcing HR and Payroll for Operational Excellence
Engaging professional support for key functions creates time for strategic leadership
Association leaders are tasked with a wide range of responsibilities that assist them in guiding and growing their organizations. Some of these involve big-picture strategic leadership, while others are day-to-day concerns, like HR and payroll, that are essential to running a healthy association but can be complicated to manage and often take time away from focusing on the strategic leadership that will carry the organization forward.
Implementing efficiencies for tending to basic operations can create space for leaders to focus on their associations’ broader goals, which is why AH Client Partners American Floral Endowment (AFE) and the Partnership for Academic Library Collaboration and Innovation (PALCI), both small non-profit organizations, chose to outsource portions of their operational workloads.
Handling Human Resources HR management entails keeping up with changing laws, knowing the guidelines of the Equal Employment Opportunity Commission (EEOC), Americans with Disabilities Act (ADA), and Occupational Safety and Health Administration (OSHA), and taking care of everything from recruiting to maintaining an employee handbook. If an organization has a small staff, this can create an undue burden.
Eric Mason, Director of Human Resources at Association Headquarters (AH), sees outsourcing HR as a way not just to lessen that burden but to improve focus. “The main reason associations want to separate that HR piece is because executive directors are hired to lead the organization and work with the board,” Mason said. “If they’re responsible for things like HR, payroll, and accounting , that weighs heavily on them. Knowing that HR is taken care of allows them to focus on things like creating bigger initiatives to grow the organization.”
Some of the benefits an association can reap from outsourcing its HR:
- Establishing best practices: Many organizations haven’t established multistep processes and documentation plans relating to employee disputes, workplace safety, and similar topics. “Even though clients are all different, there are basic best practices to ensure that they’re compliant and putting in policies and procedures that they haven’t had before,” Mason said. Bringing in experienced HR professionals can help an association establish systems that can be maintained to ensure things continue to run smoothly in the long term.
- Minimizing operational expenses: Debi Chedester, Executive Director of AFE, found that adding a member to her small staff of four employees just to take care of HR and payroll would be a financial burden. “It was more cost effective to engage and outsource these services with a professional management organization who had experienced employees in these areas, rather than to deal with potential staff turnover,” Chedester said. “It was also cost effective for us not having additional administrative overhead in employee benefits.”
- Keeping up to date on HR laws: According to Mason, HR laws are changing all the time, and it can be difficult, not to mention time-consuming, to keep up. “The executive director doesn’t have that HR experience, so they don’t know what to look for,” Mason said.
- Streamlining employee reviews: Instead of creating a reviewing system from scratch, an association can take advantage of a streamlined method for reviews that has already been tested and put into practice by other associations.
Preparing the Payroll Like HR, payroll can be unwieldy for a small organization’s leadership to manage. Without the resources for or experience with payroll software, association leaders may find themselves trying to work from Excel spreadsheets, manually tracking employees’ paid time off, or in a bind as a result of not keeping proper records in the past.
Payroll outsourcing isn’t a one-size-fits-all situation, according to AH Payroll and Benefits Manager Jill Worthington. “Some associations like to be more hands-on, and some like to be more hands-off, and AH tailors its offerings to their specific wants and needs,” Worthington said.
Some of the benefits an association can gain from outsourcing its payroll:
- Simplifying timekeeping: A small organization may not have the resources for timekeeping software. By outsourcing payroll, an association can take advantage of automated systems like Time and Labor, which can track use-it-or-lose-it paid time off (PTO), allow employees to check how much time they have stored up, and avoid any concerns about Excel formulas being incorrect.
- Complying with the latest tax information: Taxation rules are always changing, and keeping up with them can be a difficult juggling act. There are also nuances to tax laws that someone who isn’t a payroll professional may not be aware of—like ensuring that remote employees are paying taxes in whatever state they’re living in, even if that means changing their taxes for a six-month stint in a new location.
- Improving employee benefits: “A lot of times, smaller organizations might not get support from benefits vendors, because they’re too small,” Worthington said. “But making sure they get the best rates is especially important, because they have limited budgets.” When organizations outsource, they have someone advocating for them, going to market each year to make sure they get the lowest rates possible.
- Taking care of the details: Small missteps can have big ramifications, so having a payroll professional confirm everything is by the book can be extremely helpful. “One of the first questions to ask a new organization is how many of their employees are hourly and how many are salaried,” Mason said. Most organizations assume everyone is salaried, but if a position that might make more sense to be hourly, like an administrative assistant, is treated as salaried, an organization might find itself back-paying overtime. Outsourcing to someone who knows what details to look for can save a headache in the long term.
Additional Outsourcing Options Human resources and payroll are just two categories where outsourcing might make the most sense for an association. When PALCI’s programs and services expanded, the organization decided to outsource its Accounting in addition to its payroll and HR. Jill Morris, Executive Director of PALCI, attributed the organization’s ability to provide new grants and programs to seeking outside accounting assistance.
“In our four years with AH, PALCI has seen its financial operations improve tremendously to become incredibly effective and efficient, with consistent reporting that meets our organization’s needs,” Morris said. “AH even assisted us in changing to a new online financial system that has saved the organization thousands of dollars over the years.”
What Organizations Get in Return for Outsourcing So what are the ultimate benefits of outsourcing HR and payroll? It really comes down to an organization prioritizing its time. Not being required to devote hours every week to handling administrative tasks gives organizations more flexibility. “I’m not trained in accounting or HR functions, therefore could not train such an employee,” Chedester said. “Having experts handle these two areas has saved me an incredible amount of time, which allows me to focus on AFE’s mission and goals.”
And with some departments being handled outside the organization, that means employees can go directly to the hired company with personnel questions, further lowering the burden on the executive director. The executive director can also go straight to the hired company, rather than needing to deal directly with benefits providers who may not be familiar with their specific account.
“All of this allows executive directors time to strategize their leadership so they can focus on the organization at hand, which is what they’re hired to do,” Mason said.
Find out more about HR management at AH.
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‘Paysquare’ a perfect match for us as a consultant to deliver the best to our client. It extends User friendly portal for Employees and seamless processing of Payroll including statutory compliance on time! We
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‘Paysquare’ a perfect match for us as a consultant to deliver the best to our client. It extends User friendly portal for Employees and seamless processing of Payroll including statutory compliance on The most valuable service that we get from you is "peace of mind." I know that once I submit our payroll information, everything will happen on time, payroll, pay slips, statutory reports, full and final settlement, returns and I know that we are and will be always in compliance with statutory laws regarding payroll.
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We would like to take this opportunity to thank you for your continual support till date! Your support especially during this pandemic has been awesome! Be it the TAT (turnaround time) you people are processing our requests, being accommodative in accepting the II, III payroll revisions, working late/ weekends, delivering the reports in time and minimal to zero errors are some of the examples of your commitment towards work & deliverables.
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Hi Tech BioSciences India Private Limited
On behalf of Hitech Bio Sciences India Pvt. Ltd., Hi Tech Bio Laboratories, Hi Tech Analytical Works & Hi Tech Biosynth Pvt. Ltd., we appreciate your dedication to provide Payroll services to our companies from the approximately last 4 years. We acknowledge the fact that due to COVID-19, situation has become really tough across the globe. We all are forced to stay at our homes and take extra care of ourselves along with family members. It is a privilege to acknowledge you and your consultancy’s efforts and recognize the valuable service that you have provided to us.
It is always gratifying to work with such great people with extraordinary abilities to provide good and quality service. The kind of response from your side get is fabulous and most memorable with professional culture. Specifically we would like to mention that, your approach towards the client is fantastic, for e.g. response to email is very prompt, continuous touch with client, on time response to queries or questioners’, on time and accurate report sharing. Flexibility to client requirement, Client / customer centric approach etc. Timely payment of salary gives a lot of confidence to all employees and it is due to our partners like Paysquare that Hi tech has never defaulted on its commitment of timely payment of salaries.
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We are very impressed with Paysquare team due to their ability to process payroll very efficiently. We found the implementation team very knowledgeable, supportive and very systematic.
Paysquare is a very matured payroll processing solution and they have well paid down processes to manage first time as well as every month's processing.
HR Outsourcing Case Study See how we developed solutions for our partners with 75-6,000 employees.
Our HR Outsourcing Case Study: Challenge #1
A Texas based Holding Company specializing in automotive dealerships was growing by acquisition throughout the state and initially had 18 locations with 400 employees. Their continued growth plans brought them to a decision point of either needing to hire a larger staff and train them or look at partnering with Corban OneSource.
Critical expertise needed in
- HR Support (Compliance, Overall HR issues, Training, etc.)
- Benefits Administration(Bill reconciliation, enrollment in 18 different locations, questions that need to be answered by employees)
- Payroll (Do we keep hiring more payroll people as we get bigger? Does it make sense for us to do payroll?)
- We need one technology platform and the expertise to run it efficiently for all of our locations.
- How can we maximize efficiencies using technology?
- Do we want to continue to grow a department that is not core to our business?
- Do we have the current staff to handle this new growth? / How many more people will we need to hire?
- The Executive Committee decided to focus more on growth and profitability than administration. “Let’s do what we do well and let Corban OneSource do what they do well and we will all be better off for it.”
- Corban OneSource brought in an HR, Payroll and Benefits Administration technology (web based for all locations) and supported the technology with the right people that already knew how to maximize the technology.
- A dedicated toll-free phone number was set up to create an Employee Care Center for the 18 locations to get their questions answered quickly.
- A Senior HR Manager was assigned by Corban OneSource and an HR Audit was conducted to start benchmarking compliance and an ongoing Professional HR resource was available for questions and HR issues.
- Corban OneSource took over the payroll administration, so their accounting department could focus on more acquisitions.
The Holding Company is now at 26 locations, 620 employees, and still growing profitably. Every time an acquisition is made, they just call Corban and we bring them onto the existing technology and service platform smoothly with little to no business disruption. The company has contained their costs and is focusing on running their business.
Overall Hard Cost Savings for the first year:
$102,500.00 (does not include any soft costs eliminated due to business disruption of 8 acquisitions or streamlining for efficiencies)
HR Outsourcing Case Study: Challenge #2
A Data Acquisition company with 450 employees in 18 states had been in a large PEO for the last 10 years. Though they thought they were receiving the overall value they needed, the PEO was unwilling to give them an exact breakdown of what they were being charged. They rated this PEO’s customer service as good and liked the “all-in-one” bill, but could not identify whether or not the true value was there.
Specific expertise for employer law in multiple states
- HR (Compliance, Overall HR issues, etc.)
- Benefits Administration (Multiple carriers, bill reconciliation, enrollment in 18 states, questions that need to be answered by employees)
- Payroll (They were currently doing most of the work to get the data to the PEO and entering it online themselves and it was becoming way too time consuming)
- A definite need for one technology platform that all of the employees can access all over the US and the expertise to run it efficiently for all of their locations.
- A technology platform that allowed them access to all of their own data, so they could run their own reports 24/7.
- They do not want to hire any additional staff.
The CEO provided all of the information from the PEO they were currently utilizing and Corban conducted an in-depth analysis as to what their exact costs were (Workers Comp, Benefits, Cobra, Payroll, HR, Benefits Administration, Technology, SUTA, FUTA, FICA).
- Our Employee Care Center solution was implemented for all their employees in the 18 states to get their questions answered quickly.
- An HR Manager was assigned to start benchmarking the PEO’s compliance as it relates to policies and procedures, employee manuals and all areas relating to HR.
- Corban OneSource took over the payroll administration, so they did not have to hire any additional resources.
- The Company is now able to scale both up and down during peak times without incurring fixed costs.
- They now know exactly what their costs are for each aspect of their business relating to HR (Workers Comp, Benefits, SUTA, FUTA, etc.), which allows them to budget and control their costs more accurately.
- Their health benefits are now customized for their company and not a PEO that has to take into consideration hundreds of other companies. They are now able to take advantage of government programs like Workers’ Tax Credits for protected classes of workers that should add a minimum of $25,000 to their bottom line.
- They have regained access to their own corporate data to run the necessary reports when they choose and are using Corban’s advanced technology platform to track a significant amount of different aspects of their business they couldn’t before, given the PEO technology was designed for companies that have an average of 20 employees.
- The company has contained their costs and is focusing on running their business.
$252,500.00 (does not include any soft costs or the potential Tax Credit savings of $25,000)
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Article roundup
- Payroll outsourcing is when a business pays a third party to handle payroll processing, including tax and benefits deductions. This is usually paid for with a monthly or pay-period fee and an additional cost per employee.
- Payroll outsourcing providers are not legally liable for regulatory compliance, but they should be knowledgeable and experienced with local regulations in their areas of operations. They can advise employers on the local legal environment and provide compliant payroll processing.
- Payroll outsourcing can allow businesses to devote resources away from administration and towards tasks that directly benefit the core business. It can save money by reducing staffing needs and reducing the potential for human error.
- Payroll processing is often a good option for small companies with limited resources, companies hiring remote workers in multiple states or countries, and companies expanding into or with offices in more than one jurisdiction.
- Many payroll processing companies also offer other services such as full HR outsourcing, or HR management software platforms. Some Professional Employer Organizations (PEOs) also offer payroll processing services ala carte.
Remote work and international trade open up international labor and consumer markets to even small businesses and startups. To grow quickly in this environment, many companies turn to business process outsourcing services, such as payroll outsourcing. A business no longer needs to slowly grow out of a single location and develop all services in-house; even a startup can now search for clients all over the world and professionally develop complex business processes through outsourcing.
One of the business processes most applicable to an outsourcing model is payroll processing. Payroll processing is mainly an administrative task that does not differ greatly between companies and for companies of different sizes. It is, however, necessary, and relates to a number of other crucial processes such as regulatory compliance, accounting, records keeping, tax reporting, and benefits administration.
Outsourcing the management of these business functions can be especially attractive to startups and small businesses. An owner who is trying to enter the market, perfect a product or service, keep customers happy, and still stay within budget, rarely has the time to learn all of the regulations and processes involved in correct and efficient payroll processing. For businesses hiring international staff, remote workers, or opening offices in other states, it can be even more complex and difficult to maintain regulatory compliance in the various jurisdictions where employees work.
For companies that are not hiring remote workers or opening up offices in multiple jurisdictions, payroll outsourcing may provide an advantage as well; it brings in a third-party partner who can ensure compliance in payments and deductions, and frees up time and capital that business owners can channel towards growth and improved products and services.
What is payroll outsourcing?
Payroll outsourcing, in the most simple sense, is hiring a third party to process employee payroll distribution and record keeping. Payroll outsourcing is done by companies of all sizes, however, it is most commonly a solution for growing small and medium enterprises (SMEs). Payroll processing does not replace the work of an accounting or HR department, but it does free up employees to pursue work that directly affects the core business, which can help reduce expenses for SMEs.
Payroll outsourcing may be done by a company specializing in that task, generally known as a payroll outsourcing provider or a payroll service bureau. It is also commonly done by accountancy firms and Professional Employer Organizations (PEOs). An accountancy firm with local offices may provide the greatest level of service for a company based in one jurisdiction. For others, a payroll outsourcing provider may be more attractive because they are often able to service employees in many states and countries, and may offer additional options such as full HR outsourcing. For those considering working with a PEO, one that offers payroll outsourcing services only as an option may be a good way to start the relationship before fully committing to all PEO services.
The Internal Revenue Service (IRS) provides an excellent breakdown of the different types of payroll service provider in the United States.
What is included in payroll outsourcing?
Outsourced payroll services will also generally include the processing of deductions for employee contributions to benefits packages, as well as employee taxes.
Since the payroll processor will be withholding for benefits payments and (often) making those payments, they will work with benefits providers and often integrate their software systems.
A payroll outsourcing provider must be knowledgeable in the state and national laws regarding payroll, and they should be able to provide proof that employee payroll was processed in accordance with those regulations.
Finally, the outsourced payroll processor must integrate with the time-keeping system used by the client. This may take the form of data punch cards, fingerprint scans, software systems, data provided by HR, or a combination.
The payroll servicer will then provide the client with a report of hours worked and paid, tax deductions made, and benefits payments made.
How does payroll outsourcing work?
An outsourced payroll services provider calculates the total hours worked (including overtime, sick days, etc) for each employee. They then make deductions for tax payments and any employee benefits contributions.
Then, checks are issued or direct deposits are made to both employees and benefits providers.
The payroll processor presents a bi-weekly or monthly report to the client with full details on total payroll disbursement, total tax withheld, and benefits payments made.
Most payroll outsourcing services work with many different clients and should have professionals trained in accounting, benefits administration, and tax reporting. Some providers may specialize in a specific industry or geographic area (New York State, or facilities services, for example). Others though may be sufficiently knowledgeable and experienced to provide services to all US states and multiple industries. Other payroll outsourcing services specialize in international payroll processing in multiple jurisdictions. Payroll processing may also be bundled with a number of other HR or accounting services.
What are the benefits of outsourcing payroll?
1. you save time.
In small and quickly growing companies, employees often wear many hats, performing functions across different categories. Payroll processing is essential and must be done on time. What’s more it can take up many work hours when all related tasks are included. Small companies may only have one or two employees handling payroll processing, all HR tasks, as well as client order fulfillment. During busy times, payroll processing can take valuable time that could otherwise be spent on tasks that keep customers happy and grow the company.
2. You save money
Payroll outsourcing can do the work of a full-time salaried employee, or in larger companies, a whole department. Payroll outsourcers stay in business because they are able to offer these services at a high level of professionalism and at a lower cost than in-house processing would be. In startups, the resources may simply not be there to hire an in-house professional. For a company hiring international remote workers, payroll outsourcing can reduce the need for legal counsel or consultants on international labor regulations.
3. You end up with fewer payroll processing errors
Payroll processing errors can result in employee dissatisfaction if payments are late, loss to the company if payments are incorrect and not caught, and even fines if it results in a breach of tax or legal regulations.
Payroll outsourcing providers specialize in doing one set of tasks well. The success of their business relies on processing and reporting payroll correctly and professionally. Generally, this should result in fewer errors than an in-house system.
4. Payroll compliance is assured
First-time business owners experience a steep learning curve in all areas, and learning the ins and outs of payroll processing regulations will not generally be on their list of pressing problems to solve. New companies fulfilling large orders may need to hire new staff quickly; learning how to comply with local regulations in correctly processing salaries, withholding taxes, and paying benefits may be lost in the shuffle. For larger companies, the difficult moment could come when they are expanding into a new state or country and the home office team has not learned the difference in regulatory environments. In all of these cases, errors could go on for extended periods of time, creating trouble down the road when they are discovered.
There are other potential compliance issues that may not be readily apparent to business owners at first: For instance, vacation and leave time must be paid in some jurisdictions but not in others. In some countries, year-end bonuses are mandatory and tied to salary level. Tax laws and anti-discrimination regulations can vary in each state. A good payroll outsourcing provider can ensure that compliance is met before they are discovered by employee complaints or government audits.
What are the disadvantages or risks of outsourcing payroll?
1. personal data risk.
All data held electronically is exposed to some amount of risk. Technological developments can provide data thieves with more tools, driving the need for increased security from company owners. When information is held off-site, as in the case of payroll outsourcing, there is increased exposure to the risk of a data breach. If a payroll outsourcing provider is hacked, the client may not even be aware that their employee data has been stolen.
2. Client company still legally responsible
While payroll outsourcing can help ensure that compliance with local regulations is met, the responsibility for compliance still falls on the employer, not the payroll processor. In some jurisdictions outsourcing payroll may not be all that needs to be done in order to ensure that all local regulations are being met. In many countries, for instance, employers are required to have a legally registered company in that country in order to employ nationals. There may be labor laws that do not directly affect payroll and are thus unknown to the payroll processor.
If payroll processing is outsourced to a PEO, and that PEO is also acting as the co-employer, however, this risk can be mitigated. Since PEOs act as employer of record, liability and responsibility for following local regulations sits with them rather than with the client. For businesses who want iron-clad assurance that the third party agency has sole compliance liability for payroll they can engage a PEO that has been certified by the IRS .
3. Loss of control
Outsourcing any business process will result in some loss of control. When outsourcing payroll, all data will be held by the third party, not the employer. For management teams who frequently need to access employee data after hours or on weekends, this could be an issue. Some services may make all data available at all times through a software service, this can reduce the disadvantage, providing staff and management are able to successfully navigate the software.
How can payroll outsourcing risks be managed?
1. choose the right provider.
Choosing the right partner for payroll outsourcing is vital: In one Ernst & Young survey, 32 percent of respondents reported that it was difficult to work with payroll service providers.
Before you choose a payroll outsourcing provider, make sure you know exactly what you’re looking for. If your staff is all based locally, and you only need outsourcing for this one process, you may want to look at local or regional accounting firms. If you anticipate wholly outsourcing more HR and administrative tasks in the future, look for larger Business Process Outsourcing (BPO) providers that also offer the services you will need further down the road.
If you have a small administrative department and are looking to make payroll and other HR tasks simpler for them, you may want a provider that has a powerful, easy to use and integrate software platform. A Human Resources Information System (HRIS) may be a good option if your staff are already somewhat familiar with payroll and deductions.
If you are or will be operating in multiple regions either nationally or internationally, only look into payroll outsourcing services that operate in those jurisdictions. The job requires expertise on local regulations and needs a provider who can ensure compliance.
Some PEOs offer payroll outsourcing as a standalone service. If you are hiring internationally and your employees need to be hired by a local company by law, a PEO operating in the area will be able to help with employer of record services as well as payroll processing. If you are thinking of partnering with a PEO for access to PEO insurance packages, handling of liability, or HR outsourcing, signing up for payroll outsourcing through the PEO may be a good firs step and save you time and money when adding additional services.
Once you’ve narrowed down your needs, look for providers in your area, preferably also serving your industry. Look at online reviews, and ask your peers for recommendations. A good provider should be on top of compliance issues in every region and industry you will be hiring for, have strong security protocols in place, and be readily available for customer service or online access to your accounts. As with any service, compare pricing before signing up.
2. Ensure a robust agreement with provider
Once you’ve found a payroll outsourcing provider, take a look at the contract. Pricing should be explained clearly, most likely calculated with a base service charge and additional charges per employee payroll processed, plus any additional services. Check for possible penalties for late payments or breaking the contract. How long will the contract be valid, and how long will prices be locked in at the agreed-upon rate? Ensure that your data will be kept private and that there is an acceptable legal channel to pursue of this or any other clauses in the contract. If there is an error on the part of the outsourcer that may or may not lead to a fine against the employer, are they held financially or legally responsible in any way? Compare the customer service and data access availability in the contract to the access previously discussed to ensure you have the support and availability promised.
Payroll outsourcing — a case study from ADP
Payroll outsourcing — decide wisely .
Outsourcing payroll can be a good idea for some, but not all companies. For small companies with minimal admin or HR capabilities, outsourcing payroll can be a less costly alternative to hiring new staff. Larger companies with offices in several states or countries may choose payroll outsourcing to save on the expense of having several staff members doing similar jobs, consolidate the workflow, and ensure regulatory compliance. Companies hiring remote workers internationally may wish to outsource payroll processing to be sure that international employees are paid in a way that is compliant with their national laws without adding extra difficulties to the home office staff. Companies that already have an established HR department processing payroll without mistakes, and with no plans to hire in new territories, may not need payroll outsourcing services.
Outsourcing payroll is when a business pays a fee to another company to handle processing employer paychecks. In addition to making direct deposits or sending physical checks, this should also include deducting employee tax payments and employee contributions to benefits packages. The payroll outsourcing provider should be able to process payroll in compliance with local regulations, though the employer is still liable for any breach of compliance.
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Save time and money by outsourcing payroll conversion and cash management
The company, a global leader in the oil and gas industry, is a client of Computershare’s employee equity plans service. The company has 100,000 eligible employees in more than 50 countries.
The client offers a global employee stock purchase plan (ESPP) to its 100,000 eligible employees. While the human resources system is global, the ESPP contribution files come from approximately 200 payroll sources. Additionally, there is a six month purchase period with all payroll locations submitting contributions monthly, requiring the plan to hold cash in an onshore U.S. account and an offshore account. A cash account is maintained for each participant with their contributions. Dividends and interest are credited to each participant’s cash account. The participant balances and cash asset values are reconciled regularly. The size of the company, the scale of the plan and spikes in workload all create steep challenges for the company’s plan administrators.
Our professional services group (PSG) provides consultation and support for a variety of long-term and project-based tasks needed to successfully manage employee equity plans. The group assembled a comprehensive plan to provide extensive support to make the cash management process as seamless as possible. Highlights of the solution include:
Payroll conversion
Payroll data is received monthly. It is consolidated with employee demographic data, which is received weekly from the client’s global HR system. PSG monitors payroll activity and solicits missing data. Payroll data is carefully validated, and PSG coordinates with the payroll managers for any rejected amounts or special handling. Payroll managers communicate directly with PSG, reducing the strain on the client’s corporate resources. PSG even segments enrollment data to identify first-time eligible employees vs. previously eligible but not participating to help the client with targeting enrollment communications.
Cash management
After validating contribution data and resolving any rejected amounts, PSG requests a deposit from each payroll location in the local currency for all accepted contributions. PSG reconciles data and deposits, resolving any discrepancies in the deposit with the payroll contacts. Participant contributions are then converted to U.S. dollars and are posted to each participant’s cash account. The group also manages the posting of dividends and interest to participant accounts. Each month, PSG prepares a contribution limitation file so that payroll locations can stop contributions when the value limit is met. And when there is a termination or an account is closed, PSG pays out the balance to the participant by check or wire.
Tax reporting
PSG produces all the necessary tax forms for the U.S. and Canada. They work with a global law firm to produce an information package with tax guidance and personalized participant information for participants in France.
Administration Reporting
Because the data is held at a detailed level, reporting is flexible. The client receives a report package once a month, with 10 reports that were specifically designed to meet their needs. Offices in countries outside the U.S. and Canada also often request reports with various details of purchases to be used for their tax reporting.
By engaging Computershare’s professional services group for payroll conversion and cash management, the client found there was an increase in accuracy of purchases and a reduction in liability for the company. Most notably, the purchase allocation period was reduced from weeks to just five business days. The stock plan administration team was freed from spending its time on technical issues and instead could focus on serving their employee plan participants.
Ready to take the outsourcing plunge?
Computershare's professional services group specializes in the outsourcing of global and domestic employee stock plan business processes with expertise in technical, management, plan design, and staffing solutions. The group offers solutions for such areas as global payroll management and consolidation, currency conversions, cash management, integration of payroll and human resources data, and flexible data interfaces. We handle the details so you can focus on the best experience for your participants, and the best value for your company. Learn more at computershare.com/psg , or fill out the form below to request a review of your outsourcing needs with one of our Alternative Solutions Experts.
"Outsourcing this work has saved our company not just hours or days, but weeks of manual labor. And Computershare continues to partner with us to streamline the process."
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Human Resources Outsourcing Case Study – Daily Operations and Compliance
Human Resources Outsourcing Case Study
daily operations and compliance .
Business Type: Real Estate Firm Location: Limon Employees: 10 Client Since: 2010
PROFILE As a firm that deals with various areas of real estate including developing, leasing, managing and selling, our client is a part of a joint venture of three firms. Together one area they represent is that of failing commercial entities. Finding locations such as small hotels, our clients’ firm steps in, purchases the property and brings the once problem hotel back to a level that can eventually attract buyers.
PROBLEM Given that our client is dealing with often large mergers and acquisitions, being able to handle the day to day operational tasks such as Human Resources, payroll, employee relations and benefits often proves to not be a manageable task. The firm identified that outsourcing this area made strong fiscal sense allowing them to focus on the other areas required to bring the properties back to sellable conditions.
SOLUTION During the bid process for a mid-sized hotel in Colorado, the firm built in the costs of outsourcing Human Resources within their funding requirements and retained StaffScapes to take over the implementation of payroll as well as the guidance of Human Resource review, updates and changes.
RESULT “Having StaffScapes on board to help clean up the HR practices made for a perfect partnership with us. We can focus on the fiscal areas of our property acquisitions but can at the same time be confident that we are compliant and that what needs to be done is being done.” said Hal, one of the partners for the firm.
In just the first few months of the partnership, StaffScapes was able to streamline the new hire process, educate the management on appropriate interactions with employees, and began the process of personalizing the new policies and procedures and handbook for the hotel.
Top Six Reasons To Outsource Payroll Processing
Payroll Processing can sometimes feel like a war. Everything can conspire to defeat your best intentions: the tax laws, the reporting paperwork, deductions, printing, and distribution.
How do you win this battle?
There's an ancient adage that goes: "an army fights on its stomach." Of course, not to be taken literally, but it means that you need to feed your troops to get the best performance. For an army, this is crucial and a matter of life and death.
Your business doesn't "run on its' stomach," but you need to keep your employees happy to stay at peak productiveness. What's the primary factor in doing that?
Get them paid! Get them paid on time. Make sure that they're paid the right amount, with the correct deductions, EVERY SINGLE PAY PERIOD!
It's no less crucial for a successful enterprise than it is for an army.
Now the Payroll Process isn't that complicated, but it's time-consuming and tedious work that no one wants to do- unless that's your job! And many companies use Payroll Processing Services , that is, have another company process their payroll. They're often called Payroll Outsourcing Services or Payroll Management Services, and of course, they charge a fee, sometimes a hefty one. Maybe you are using one now, and perhaps wondering if you can get the same service for a better price? Or if you're not using one, maybe you should consider it.
Managing complete payroll processing, in addition to your core business processes, can be overwhelming. Outsourcing payroll management services to a payroll processing partner will permit you to focus your time and energy on your core business functions. Here are some of the things a top-ranked BPO can do:
- Calculating Paychecks and Tax Obligations based on Employee Time Sheets
- Providing Management Reports
- Employee Self-service Features
- Time off Tracking
- Tax Liability
- Labor Allocation
- Accrual Balances
- Wage Garnishment Administration services
- Custom Payroll Management Services
- Check Stuffing/Signing, Printing, and Delivering Checks
- W2 Forms and Tax Returns Filing
- Payroll Tax Reporting
- Online Benefits Enrollment
- Pay Register
- Department Summary
- Job Costing
- Workers Comp
Outsource Payroll Processing.
Save Time, Money, and Your Sanity.
You wouldn't be reading this if you didn't require what Outsourcing Payroll Processing can do for you. So let's get down to the details.
- Time and Cost Savings: Outsourcing payroll allows employers to concentrate on their core business and frees up the owner, human resources, or accounting personnel to work on strategic tasks that could ultimately affect the success of the venture
- Avoid Mistakes and Penalties: Payroll errors become audits and penalties - a place no business wants to be. Government rules and regulations are always changing, and business owners have to stay on top of those changes. Without an outsourced payroll partner, this is going to cost extra time and money.
- Enhanced Data Security: Most payroll services have technologies that can spot and alert clients to various types of payroll fraud, and online payroll solutions offer the best security for confidential payroll data. A top-notch payroll service should have secure, hacker resistant systems for data.
- Compliance With Government Regulations: Keeping up with state, federal, local, and industry-specific regulation changes can be a challenge. A reputable outsourced payroll provider has staff dedicated to keeping up on all of the changes that could affect your payroll, always keeping you in compliance.
- Access to Outside Expertise: Payroll companies use a team of experts to handle Human Resources and Payroll. A benefits department would handle benefits and deductions, workers compensation experts, and human resource experts who would help with employee-related issues.
- Access to latest Tech: Small business owners may not have the newest version of their payroll software and the most recent tax tables. The wrong tax tables can result in penalties, and paying to upgrade software can be a continuing expense. Take all of this off your plate and outsource your payroll services!
Now That You Know, Start With the Best.
It takes a team of qualified, skilled, and experienced professionals to make your Payroll Processing project successful. This is precisely what Rely Services can offer you. And at a fee that will significantly lower your overhead and allow your key players to concentrate on growing your business.
Using Rely Services as your Finance and Accounting BPO partner will save you more than time and money. Since they are continually refining their business methods, their constant pursuit of perfection will benefit your operational practices. Contact Rely Services today for a detailed evaluation of the many ways we can make you more successful.
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Goodbye to messy contractors management for 119-Year-Old Chemical & Clean Energy MNC.
Clear human capital visibility within 590 strong financial services establishment, automobile giant does away with manual multi-currency claims conversion, world-renown japanese construction mnc takes control of its additional costs of overpayments, japanese precision engineering giant achieves higher efficiency by deploying integrated hcm solutions, payroll outsourcing allows one of the world’s top banks to reallocate resources for revenue-generating tasks, facilities management giant with 7000+ headcount says hello to increased workforce productivity with payroll outsourcing, retail giant standardizes time attendance and payroll management for 63 outlets island-wide, supply chain mnc optimizes risk management by payroll outsourcing, well-renown electronics retail manufacturer moves away from cumbersome commission computation, world’s leading pharmaceutical manufacturer does away with legacy systems for global integration, building a payroll structure one brick at a time..
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The Problems with In-House Payroll
A typical in-house payroll department has many concerns. Besides the task of issuing paychecks , it may have to do so for many company locations where tax rates differ, employees are paid on different dates, and tax reporting to the various state governments must be made on a variety of different forms. Worst of all is the tax remittance, which involves a heavy penalty if it is paid even one day late. All of these problems and costs can be avoided by handing over the payroll processing function to an outside supplier .
Advantages of Outsourcing Payroll
Payroll is one of the most commonly outsourced company functions. There are several good reasons for this, which are noted below.
Suppliers backup a company’s payroll information continually, and should have off-site storage of the backups, as well.
Check Stuffing
All payroll suppliers will stuff paychecks into envelopes, which eliminates a low-end clerical task that the payroll staff would otherwise have to perform.
Direct Deposit
Most payroll suppliers have the capability to issue payments to employees by direct deposit . Companies that process their payroll in-house can also do this, but only through the services of a third party that handles direct deposit.
Expert Staff
Suppliers have a core group of highly-trained staff who not only know their systems and payroll regulations quite well, but who also provide training to clients, as well as advice over the phone.
Multi-Location Processing
Larger payroll suppliers have locations in most major cities, and so can directly deliver paychecks to most urban locations. They send paychecks to more remote locations by overnight delivery service.
New Hire Reporting
Each state government requires a company to report the hiring of new employees to them, so that they can determine if there are any garnishments outstanding against these individuals. Payroll suppliers usually offer this reporting service free of charge.
Larger payroll suppliers offer payroll debit cards as a payment option. This is a good alternative to direct deposit for those employees who do not have bank accounts.
Pension Plan Linkage
Some payroll suppliers either operate their own 401(k) pension plans or are linked to such plans offered by third parties. These suppliers can link pension deductions in the payroll system to their plans, so no separate pension remittances are required.
Suppliers have a standard set of “canned” payroll reports, and usually offer report writing software that allows you to extract information and present it in formats that are specific to your company.
Software Updates
The employer no longer has to maintain any payroll software in-house, and so is no longer concerned with software updates. The supplier is responsible for all updates to its own software.
Tax Remittances
A supplier calculates all payroll taxes and remits them to the government without the company having to be involved. The savings from avoided tax remittance penalties may pay for the entire cost of the supplier.
Suppliers maintain the most up-to-date records of tax rates charged by all government entities, and so can accurately calculate taxes payable to cities, counties, states, the federal government, and other special entities throughout the country.
Unemployment Claims
Large payroll suppliers will respond to unemployment claims on behalf of the company. This involves the complete range of activities from initial claims filings through final disposition of the claims. Suppliers typically provide summaries of all claims on a secure website, which the payroll manager can access to obtain the latest status of claims. This is not a cost-effective service for smaller firms that only deal with a few claims per year.
All suppliers provide W-2 forms to employees after the end of each calendar year . Many also store this information on-line, so that employees can access their forms from previous years.
Other Services
Some suppliers offer additional services related to payroll, such as pension plans, benefits administration, and timekeeping systems.
Thus, there are many services available to a company that is willing to outsource its payroll function. The key factors are enhanced convenience and the elimination of any risk associated with not remitting payroll taxes on a timely basis.
Disadvantages of Outsourcing Payroll
There are some situations where using a payroll supplier is not viable or is not cost-effective. These situations are noted below.
Despite what the payroll suppliers may say, outsourcing payroll is more expensive than processing it in-house, because the supplier has marketing costs and a profit requirement that an in-house payroll department does not have. Suppliers give the appearance of having low-cost services by selling a basic bundle of services at a low cost, and then adding high fees for additional services.
Database Linkage
Outsourcing payroll shifts the payroll database to the supplier. This can be a problem when a company is maintaining a large, integrated database of information (as is the case with an enterprise resources planning system) and needs to have this information in-house. Some larger payroll suppliers may be willing to create an interface that extracts the needed payroll information from a company’s ERP system, thereby keeping information on-site.
These two factors are less critical for smaller businesses, which therefore form the core group that outsource payroll. Larger companies are more likely to retain payroll in-house, since they can process payroll at lower cost than suppliers, and can retain payroll information within their computer systems.
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Infosys BPM's HR Outsourcing case studies offer insights into how the company successfully transformed operations for our valuable clients. Learn more. Live Enterprise; Services ... Case Study. Lean Adoption for Workflow Management and Quick-Wins Automations. Case Study. Leading Mortgage Bank Realizes Business Value across Lines of Business.
Paper Prepared By H.R. Outsourcing An Introduction, ICFAI University Press, By V R P Kashyap and E Mrudula PAPER PREPARED BY: Dr. A. M. Gurav, M.Com. (Costing and Taxation), M.Com. (Adv....
Payroll Outsourcing Automate your payroll management and process accurate and on-time employee payments; ... Case Study Discover real-world solutions and strategies through our extensive collection of case studies. Flyer Stay in the know with our latest releases, beta product versions, upcoming events, and more.
$102,500.00 (does not include any soft costs eliminated due to business disruption of 8 acquisitions or streamlining for efficiencies) HR Outsourcing Case Study: Challenge #2 A Data Acquisition company with 450 employees in 18 states had been in a large PEO for the last 10 years.
Payroll outsourcing — a case study from ADP ADP Comprehensive Services: HR and Payroll Outsourcing Client Testimonial - 3 Minutes Watch on Payroll outsourcing — decide wisely FAQ Is outsourcing payroll a good idea? Outsourcing payroll can be a good idea for some, but not all companies.
Save time and money by outsourcing payroll conversion and cash management A Computershare Case Study Background The company, a global leader in the oil and gas industry, is a client of Computershare's employee equity plans service. The company has 100,000 eligible employees in more than 50 countries. Situation
case study: payroll and hr administration outsourcing for a large business A global IT corporation was seeking payroll and HR administration services for over 11,000 employees in 3 European locations, with employee and manager self-service function and a unified interface.
Human Resources Outsourcing Case Study Daily Operations and Compliance Business Type: Real Estate FirmLocation: LimonEmployees: 10Client Since: 2010 PROFILEAs a firm that deals with various areas of real estate including developing, leasing, managing and selling, our client is a part of a joint venture of
Outsourcing payroll management services to a payroll processing partner will permit you to focus your time and energy on your core business functions. Here are some of the things a top-ranked BPO can do: Calculating Paychecks and Tax Obligations based on Employee Time Sheets. Providing Management Reports. Employee Self-service Features.
Case Study Payroll Outsourcing allows one of the world's top banks to reallocate resources for revenue-generating tasks! Case Study Retail giant standardizes time attendance and payroll management for 63 outlets island-wide. Case Study Supply Chain MNC optimizes risk management by payroll outsourcing.
Outsourcing payroll shifts the payroll database to the supplier. This can be a problem when a company is maintaining a large, integrated database of information (as is the case with an enterprise resources planning system) and needs to have this information in-house. Some larger payroll suppliers may be willing to create an interface that ...