Managing payroll has become something of a nightmare in recent years. This is due to many different factors. You may have a complex arrangement of employees (full-time staff, freelance, contract, in-country, out-of-country, and so on). You may have a different mix of bonuses to give out to staff.
Then, there are changing rules and regulations. This gets particularly difficult if you hire people outside of your home country, state, or province.
While large, wealthy businesses will always find it beneficial to simply invest in their own HR department, medium-sized companies don’t have that luxury. That’s why more than ever before are looking to outsource their HR needs.
What Does it Mean to Outsource Payroll?
You can outsource your payroll and other HR needs. The HR Dept in Doncaster, for example, can take over your payroll needs while your in-house team handles human management. They can alternatively handle all of your HR needs (which is useful if you’re experiencing a talent gap while you’re in the hiring process.
The reason why businesses outsource their HR needs is because you benefit from a whole team, for less. If you need to use that entire outsourced team consistently, then yes, you’re better off hiring in-house. If, on the other hand, you only need them during payroll (once per month, for example) outsourcing can be the simplest decision you make for your business.
Benefits of Outsourcing Payroll
There are many strategic benefits that come with outsourcing your payroll needs to an HR agency.
1. Cost Savings
Overhead is a killer when it comes to managing your costs. If you need to hire someone every day, then yes, hiring in-house makes sense. If you only need more staff members in your human resource department for a few days during the month, however, then outsourcing can help you save significantly. Yes, you may pay more for those few days, but since you’re only paying for a few days’ worth of work, you end up saving more overall.
2. Efficiency
Outsourcing your needs to a full-scale agency means you rack in the efficiency. That fully-realized team knows exactly what they are doing, and has all the tools they need to do it as efficiently as possible. Since they specialize in things like payroll, you benefit from fewer errors and faster turnaround. You also free up your internal teams to handle other critical tasks (like hiring and training).
3. Compliance
One of the biggest struggles for HR teams is keeping up with regulations and compliance. There is a lot that an HR team needs to do, and plenty of different laws that they need to work around. Giving them just one area of focus (workforce laws) can help you stay more compliant with fewer resources.
You can do this because the outsourced HR agency is also keeping up with compliance laws and regulations. You can trust that they are doing the latest to keep up with payroll and processing laws and regulations, meaning you don’t need to invest extra training for your in-house team (until it’s time to bring all your payroll needs in-house, that is).
4. Scalability
When you outsource your needs, you get the size of the team your business needs. If you suddenly start to grow, your business will gain access to more HR team members from the agency (for a higher fee, of course). Since you can rely on that outsourced team, you can seamlessly bridge periods of growth or shrinking, allowing you to maintain operational efficiency no matter what.
5. Global Reach
If you are branching out to a new country, outsourcing can be just what you need until you get up to speed. If you are based in the US and open up a UK branch, for example, you’ll want a local HR team that knows the local laws, regulations, and expectations. This way you can hire the best talent, and manage them with a local team that matches their hours.
When to Stop Outsourcing?
You should continue to outsource for as long as it makes financial sense. You may have a very small team in a second country to handle local operations, for example, where having a full-time in-house team on hand will never make sense. In this case, you may want to continue to invest in HR services out of the house.
In other cases, you may only need to rely on outsourced HR services during periods of growth. Once you reach a certain size, you may then want to transition into a full-time, in-house department.
The best way to decide whether or not to keep outsourcing is to look at the numbers. If the cost of outsourcing covers the price of an in-house team, then it may be time to start investing in the transition. Otherwise, continue happily outsourcing.
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