Payroll Outsourcing

Payroll Outsourcing means outsourcing of HR processes such as recruitment, payroll processing, performance reviews, Labour compliances etc to a third party company wherein the entire responsibility of HR is parted on to the third party company.
Many businesses today look to outsource their HR activities, whether it relates to recruitment, payroll processing or both. On some occasions companies want legal Labour expertise & technology refresh and rather than deal with it themselves they will give it to a provider and replace the service.
Global Business Intelligence major, McKinsey & Co has declared that the HR Outsourcing/Payroll Outsourcing market will touch an impressive US$120 billion by 2010. As of now, India is barely skimming the surface of this massice potential. Currently, only a handful of companies exist in the country that are seriously looking at HR Outsourcing services as their gateway into the BPO arena.

AS per a report by Nasscom "HR ITES-BPO recorded growth, with Indian players moving beyond just benefits and payroll outsourcing to higher-end ITES-BPO engagements".

HR Services have in the recent past become one of the key elements in the enlarging outsourcing game. Recognizing the fact that senior management needs to get out of Mundane day-to-day processing work, and focus instead on strategic planning, core competencies, customer satisfaction and decision making, a number of large companies, across the globe have begun opting for outsourcing of their HR Services.

According to analysts, cost reduction is usually cited by companies as the most crucial reason for HR Outsourcing as it is stated to lead to savings of over 30 to 40% for customers. However, cost alone is not the only factor. Once considered the major reason for HR outsourcing practices, cost is being supplanted by other, more strategic reasons. A 2001 Gartner Focus report (Outsourcing: Time to deliver results) states that "Only those companies ready to address the necessary transformation of their HR Processes will find that outsourcing will bring access to world-class processes, competitive advantage, and increased shareholder value."
This gradual dependence by organization on professional and specialized companies to handle their mostly non core HR activities is creating a massive market for Payroll Outsourcing & to a greater extent HR outsourcing.

The main reasons for Payroll Outsourcing are
* Cost effectiveness
* Reduced administrative costs
* Capitalizing on technological advances/Expertise
* Improved customer service
* Redirecting HR focus toward strategy/Planning
* Focus on core business
* Reduced corporate overhead
* Provision of "Seamless" delivery of services
* Insufficient Staff