PAYROLL OUTSOURCING: A NEW PARADIGM

MOHAMMED ASRAR12YACMA112

By Princy Thomas and P K Thomas

INTRODUCTION

Outsourcing is the process of shifting tasks and services which were hitherto performed in-house to outside vendors (contracted out).

It is a strategic decision to give a task or activity to an independent contractor to improve service and product quality, reduce production cycle times, lower costs, increase focus on core competencies, and in general, enhance organizational effectiveness.

PAYROLL OUTSOURCING

Payroll outsourcing is one such process which is related to employee compensation

Employee salary is the remuneration received by an employee in return for his/her contribution to the organization.

Payroll outsourcing can be defined as the process of outsourcing to do the routine work of managing salary, its calculation and payment, along with any other related functions of a firm for a specific fee to a third party.

WHY PAYROLL NEEDS TO BE OUTSOURCED?

Payroll outsourcing helps valuable human resources inside the organization to focus more on strategic activities for generating the added value and to free the management’s time for strategic decision making.

Cost reduction. The other reasons for outsourcing are: Lack of in-house expertise, Lack of interest in keeping the process inside

the organization, & To avoid risk

BENEFITS OF OUTSOURCING

Reduce Cost Avoid Problems Due to Attrition Increase Efficiency Increase Productivity Complies with Government Regulations

CHALLENGES OF PAYROLL OUTSOURCING

Accuracy and Real Time Processing Keeping Down Technology Acquisition and

Maintenance Costs Integration with Applications Flexibility of Various Scenarios

CONCLUSION

Payroll outsourcing is one of the innovative practices in HR which helps to avoid unnecessary risk and effort to meet various objectives of the organization.

The propensity to outsource payroll is the highest, resulting in a huge opportunity.

When the size of an organization is small, the accounting firms are the preferred payroll service providers.

Eventually organizations not only outsource payroll, but also consider options of outsourcing other HR transactions to the same service provider.

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