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Payroll today, like any other business, has become extremely competitive.

A business without the right value proposition competes as a me too value proposition in a crowded market place. The payroll market is extremely fragmented with the bulk of business with small players. The market for payroll is essentially in the small and mid-segment as most of the large players have developed a realtively comprehensive HR management system (HRMS). If you are a payroll services provider, then some companies have extremely experienced team who work with you on specific strategies that include Some of the value propositions include Developing sales collaterals Pre sales approval processes and templates Helping you develop a rate card Market segmentation & pricing Sales workshop for market segmentation & penetration Compliance presentations related to payroll Standard pricing proposals

Outsourcing....benefiting organizations

Outsourcing is the use of external providers for service, typically handled internally, on a regular or permanent basis. This form of subcontracting adds value to a task that could be accomplished internally, but for various strategic reasons, it is "jobbed out". As outsourcing has become more prevalent, it is apparent that carefully managing the process is very important. Outsourcing can fulfill many functions for a company, some of the services commonly available include: database management, network operations, help desk, disaster recovery, development and maintenance of applications, and data and video communications. One of the most commonly outsourced services is payroll. According to a CFO study, payroll and retirement benefits is the second most outsourced function in organizations.

Companies that vary in size and industry have experienced many benefits of outsourcing. Cutting costs is one of the main reasons that companies look to outsourcing as an option. American Express claims to have cut costs by 25 percent by outsourcing. Although one of the most positive attributes of outsourcing is cost reductions, it is difficult to quantify exactly how much a company saves. Outsourcing contracts have been described as moving targets. By comparing outsourcing costs to huge capital expenditures, it appears more affordable at first glance. But outsourcing may result in the identification of new opportunities that would not have been considered previously and may require more dollars spent overall. These additional costs are often offset by increased profits generated by new projects. Most importantly, by outsourcing companies save costs, are able to make decisions more flexibly, and are able to focus on their core business, which is often described as market agility. As mentioned earlier, outsourcing provides flexible decision-making. This has the greatest impact on the human element of a company. Staff can be reallocated to tackle other projects when outsourcing is utilized. Also, headcount fluctuations can be avoided, which leads to significant cost savings. Benefit packages needed when firing employees and training expenditures when hiring workers can be extremely costly and inefficient to companies. Similarly, outsourcing can fill temporary staff shortages without having to grow the company too quickly. Due to increased demand of technology-proficient employees, companies have relied upon outsourcing as a way to quickly locate capable people to handle specific tasks. Outsourcing can provide flexibility to change service or support offerings for different marketing campaigns or promotions as well as quickly move customer service data to other departments. Interestingly, the effect of outsourcing on human resources is no longer just about headcount reduction, as seen in the past, but rather finding ways to meet the company and employees needs. Maximizing employee development can be achieved by outsourcing less interesting or end-of-life work. Employees will provide more value to a firm if they feel that their efforts are focused on important initiatives and that their contribution is worthwhile. Also, it is important for employees to feel that they are continually learning and improving themselves, rather than being stifled by mundane tasks. For these reasons, using relatively less expensive employees or sharing costs with other corporations for routine work makes outsourcing attractive to companies. Another advantage of outsourcing is having an additional source of advice in making significant strategic decisions. If a good relationship is formed between the client and vendor, a company benefits from having another pool of resources from which to seek advice and expertise. Closing the communication gap between the wants and needs of various business management levels and the vendor who is responsible for incorporating the information technology into a company is important. Outsourcing its non-core functions enables a company to focus on its core competencies and helps management reach a consensus. Ideally, companies would like to find an outsourcer that serves as a one-stop shopping environment for technological, strategic, and operational assistance. Outsourcing often helps a company focus more on innovation. Having fewer day-to-day management issues to worry about enables a company to think beyond its short-term goals. In

particular, outsourcing can serve as an organizational lever for an IT department to ensure that their areas are functioning properly. Weak areas are ideal candidates for outsourcing and outsourcing aids in the development of supply chain integration. A well-operating company that recognizes the benefits of outsourcing can pass efficiencies down to the customer and be more competitive by decreasing time to market. Often, client companies think that outsourcing results in the conversion of fixed costs into variable costs, which leads to increased financial flexibility. This is not always the case. As mentioned earlier, it is difficult to come up with a total amount in savings that outsourcing provides a company. Most vendors require long-term contracts that provide them with stable revenues over time. These contracts do not always result in flexibility for the company and must be considered carefully when negotiating with a vendor. Many companies may perceive outsourcing as an opportunity to move surplus employees to other jobs serving other companies. From a public relations perspective, companies may think of outsourcing as an alternative to laying off employees. In reality, employees are very keen about the job market and would consider changing jobs regardless of whether a company outsources. In general, outsourcing does not affect employment issues for a company as traditionally assumed in the past. Another misconception is that a company will be relieved of managing a staff function through outsourcing. Contrary to this assumption, managing an outsourcing vendor may not be any easier that managing internal staff. The involvement of contracts and legal interpretations may prohibit management from giving advice or feedback. In fact, management may spend more, not less time, focusing on an outsourcing relationship. Finally, many companies may perceive outsourcing as a way to pass the headaches of a dysfunctional department to a vendor rather than trying to solve the problems facing the company. The reality of trying to escape problems only sets the company back to further in learning from its business strategy.

According to recent research, the global human resources outsourcing market will reach $162 Billion by the year 2015 with payroll outsourcing playing a major role in the industry.

Global Industry Analysts released a research report on the 9th of February concerning the continuous growth in the HR outsourcing industry. The report speculates that, with the global economic downturn, cost reduction has become paramount for business with focus on smaller investments in outsourcing single processes, as well as enhancing the significance of HR outsourcing. Payroll is just one of the areas that are more commonly outsourced due to the inherent complexity of the function and the required accuracy as it is carried out.

Meanwhile, a study by PriceWaterhouseCoopers in conjunction with ADP (NASDAQ:ADP) on the 1st of February specifically focused on the true, hidden costs that can be associated with payroll and HR administration when done in-house as compared to when outsourced with ADP, or comparably, to other outsourcing companies. According to the study, organizations that retain payroll, workforce administration, time & attendance and benefits administration in-house spend on average 18% more than those that are outsourcing. With larger organizations spending 27% more than smaller sized organizations and organizations using software vendors spending 32% more. The report further states that despite speculation stemming from significant technological advances in payroll administration software, costs for payroll administration has increased since 2003, contrary to belief.

Increase in acquisitions and partnerships among software and services providers have also been observed in the past few days. Workforce management solutions provider, Valiant, announced on the 25th of January that it has acquired payroll & consulting services provider to the restaurant and catering industries, Payroll Computing Services in an effort to expand its presence in the hospitality industry. The company is seeking to reinforce its, strategic commitment to expand market share on the Valiant platform of web-based Workforce Management Products (WFMP). Meanwhile, company Xcel HR announced on the 8th of February that it has acquired Astra HR, achieving rock solid support for its payroll platform. On the heels of this news is payroll, HR and benefits outsourcing solutions provider, Paychex Incs (NASDAQ:PAYX) completion of its acquisition of SurePayroll, a Software-as-a-Service payroll processing provider.

One country that may soon see marked increase in payroll outsourcing is outsourcing destination India. The countrys insurance regulator, the Insurance Regulatory and Development Authority (IRDA), issued guidelines early this month regarding the outsourcing of activities among insurance companies. The organization stipulated that insurers must take the necessary steps to ensure that companys outsourcing activities should not result in internal control, business conduct or reputation being compromised. The IRDA identified payroll management among others as a non-core activity, and as such, will likely lead to more business from insurance companies that are complying with the IRDA and restricting outsourcing activities of core functions.

Payroll administration services will, aside from seeing increased market growth, also likely see major advancements in process as competition also increases. Likewise with more companies choosing to adopt outsourcing over software solutions, more partnerships and acquisitions among software and solutions provides will also likely be evident. With outsourcing of non-core activities gaining popularity, the expected growth in the payroll outsourcing market may barely scratch the surface on the depth of adoption of outsourcing of these kinds of services and the class of service that outsourcers will be able to provide in the future.

The Benefits of Outsourcing Payroll Some companies create a separate department for payroll, others make it part of the human resources department, while others outsource payroll to a third-party payroll processing service. This final option fits small businesses that may not have the proficiency or time to administer payroll or larger businesses that see outsourcing as a cost-saving technique. Benefits of outsourcing payroll include increased efficiency, accuracy, transparency and confidentiality, with decreased liability and cost. The complete range of benefits can be found in the table below: This article was originally published in the India Briefing Magazine, titled Payroll Processing in India. In this issue, we aim to help expatriate managers and business owners grasp the overall picture of how payroll works in India. We also discuss how outsourcing payroll can benefit all types of companies, particularly those of small and medium-size. Major Payroll Outsourcing Trends In 2013 The year 2013, in continuation to the previous one, has seen a boom in the outsourcing industry. Payroll process outsourcing is no different and there are many emerging outsourcing trends in the industry. Outsourcing payroll services is a rising trend among enterprises and is forecasted to grow in the coming years. Some of the major payroll outsourcing trends witnessed by the year 2013 can be summarized as below: Payroll outsourcing trends Trend 1: Decreased costs, increased control Today, organizations opt for services that cost them less and comparatively give more in return.. Organizations prefer to outsource their payroll services overseas, where they would have to pay less and would get the required services in return. To boost the trend, even the payroll companies keep their cost low, enticing the businesses and offering them greater control. Trend 2: Latest technology, without investment The increasing use of technology is yet another major payroll outsourcing trend. Organizations today are much more dependent on the latest technologies when it comes to outsourcing their payroll process. It helps because the outsourcing vendors use latest technologies to make the payroll processes easier to handle. This indirectly also helps businesses reduce the cost incurred behind developing and constantly updating technologies. The development of various applications is one of the best examples of latest technologies used by payroll companies. Employees now need not go and stand in queue just to find out whether they have received their pay or not; they can find this out by a single click on their smartphones.

Trend 3: Globalization, acceptance of multi-currencies Globalization is not just a growing trend for payroll process outsourcing but in every other industry too. Today, boundaries have blurred and countries outsource their processes overseas. Organizations look for outsourcing partners that work in multiple currencies along with having the ability to handle various tax obligations and tax laws that keep changing. Trend 4: Hybrid HR departments Although outsourcing payroll services is a growing trend, organizations face a problem when it comes to control over the processes. When outsourced, there is not much control left in the hands of business owners. It is hence a growing payroll outsourcing trend to develop a hybrid HR team. Under this, majority of the processes are outsourced and managed by the outsourcing partner. However, the company has an internal HR department that conducts a cross-check to make sure everything is ready for employees to be paid. HR and Payroll software market to cross $4 billion by 2016: IBISWorld Report Posted on October 4, 2011 Written by Steve 0 Comments October 4, 2011: Service providers into HR and Payroll software; be ready there are immense opportunities for you in the coming five years.

Yes, IBISWorld report states that in the coming five year the demand for HR and Payroll software is about to touch heights. According to the report it is anticipated that by 2016 companies which are into HR and Payroll software and solutions might see a tremendous up trend in revenue generation that would reach up to $ 4.0 billion. The growth rate on the industry is calculated at an average of 5.0 percent every year IBISWorld report added. Regarding IBISWorld, it is one of the best research analysts around the globe which always come up with findings related to outsourcing industry. The report clearly defined that as the global situation is crucial and outsourcing business is slow, companies are focusing more on in-house facilities and planning to invest more on HR and Payroll software so that they get internally stronger to face the situation. At present many companies are adopting this as a strategic approach to end up issues for time being. In the later stages, while economic issues come to an end and market starts recovering, the companies can again avail the possibilities wide open in outsourcing industry. As far as HR and Payroll industry is concern this is an elegant opportunity as there will be demand for their products as well as online software licenses updating will also increase. The software ensures global players to automate administrative process which will reduce time required for the employees to perform administrative works. Moreover it will also ensure to minimize the risk of mistakes and data manipulations along with cost efficiency. IBISWorld also added that million dollar companies which are into software development such as Microsoft is trying to accrue small players in the sector to enrich there product length.

The service providers that are into Human Resource Outsourcing will be one affected by this emerging trend. At this point of time there are many service providers both in the offshore and near shore that are exclusively into delivering HR solutions for the clients in different parts of the world. Such companies might find it difficult to survive in the long run. IBISWorld estimates that this trend is to be continued for another 5 year and it is obvious that for service providers it is a big blow. IBISWorld survey report on the industry was an eye opener for service providers in the BPO sector especially who was anticipating an increase in business and increase in number of contracts by the end of next year.

One very important trend in the recent times has been the growth of human resource outsourcing. HR outsourcing is the outsourcing of peripheral but necessary administrative tasks such as payroll, benefits, education/training, recruiting personnel, administration, to realize economies of scale and achieve standardization of services. Rapidly changing market dynamics and global competitive pressures have caused organizations to spend more time focusing on their core business. Organizations are fast realizing that they can't be all things to all people. So companies now, be it a software company, a service provider or a manufacturing firm, decide what they are good at and outsource everything else, i.e., focus on their core competency, and let someone else do the rest in a more efficient and cost-effective manner. As a result, human resources outsourcing is becoming increasingly prevalent. The number of companies outsourcing HR activities continues to rise, and the scope of outsourced HR activities continues to expand. HR outsourcing can happen in HR functions, like payroll administration (producing checks, handling taxes, dealing with sick-time and vacations), employee benefits (Health, Medical, Life insurance, Cafeteria, etc), human resource management (hiring and firing, background interviews, exit interviews and wage reviews), risk management, etc. Outsourcing has become a common response to manage people and technology resources strategically, enhance services, and manage costs more effectively. Outsourcing noncore activities allows HR professionals to move away from routine administration to a more strategic role. The organization can focus on higher value-added activities while the outsourcing provider takes care of the day-to-day administration. Critical internal resources, such as technology and talent, can be devoted to company's core business. Outsourcing reduces the need for large capital expenditures in noncore functions. Thus, outsourcing becomes a strategy for reducing the capital intensity of the business. This strategy has gained popularity as companies aim to become more nimble and gain the speed and flexibility necessary to compete in today's business environment. A growing number of executives understand the benefits it can bring in terms of not only cost savings, but also heightened strategic focus. Many recognize outsourcing relationships as long-term partnerships created to further the strategic goals of the organization. The HR outsourcing business opportunity is large and India is likely to garner a larger and larger piece of this pie in the future. India, with its intrinsic advantages such as low cost, ready pool of

English speaking manpower and geographic positioning, is emerging as a viable destination for HR outsourcing companies to set up their businesses. But still here people are not very clear about what exactly is manpower outsourcing all about, and issues like quality and trust needs to be addressed properly. Experts say the basic reasons hampering the growth of HR outsourcing in India are confidentiality and cost factors. Moreover, the fear of losing jobs, losing control over confidential data, ethics and quality of outsourcing vendors, security breaches and overall confidence in the vendors deters many organizations. The biggest problem and this is why the HR outsourcing industry in India is on the back foot - is the government and the industry's failure to tackle issues like data security and data privacy. This is where Indian HR outsourcing companies face a major handicap. The Indian government is still grappling with drafting a data protection law designed to quell growing privacy concerns from their offshore clients. However, the future seems to be very promising. It's set to become a $ 51 billion market worldwide in 2005, representing 39 per cent of the total business process outsourcing revenue. Estimates show that the latent size of HR outsourcing in India is about $ 2 billion with a current market of $ 27 million and it is growing at an alarming rate of about 50 per cent. India has immense potential as more than 80% of fortune 1,000 companies are discussing HR outsourcing as a way to cut costs and increase productivity. Right now, India is barely skimming the surface of the HR outsourcing market potential. Indian life Hewitt (ILH), FIDELITY, EXULT and MAFOI are some of the prominent HR outsourcing services providers in India and the clients include giants of manufacturing, software and service industries like GE Capital, Ford Motors, Hyundai Motors, Satyam Group, Infosys, Enron, Haldia Petrochemicals and HSBC, to name a few, but many more needs to be added to that list. HR outsourcing has a huge potential for employment also. Nasscom numbers are a million software jobs by 2005; HRO would be about a 25 per cent of that. Experts believe that in present times HR outsourcing is undergoing a transition phase, it would still be sometime before we see increased levels of HR activities being outsourced to India as lack of domain knowledge and quality are some of the critical issues. Till that time, HR outsourcing in India remains to be a gold mine waiting to be unearthed...