Outsourcing Payroll Management Could be a Stress Buster!

The title may not appear business-like, but stress among large companies is common. For companies under stress economically, or have their arms stretched too far this outsourcing is the only recourse. No company truly wishes to outsource major functions of the business. But outsourcing does make sense when you find it a logical step to alleviate stress or to enhance focus on core activities.  

Outsourcing is like handing over a function to the backend service provider. But while you outsource a non-core function to a service provider, BPO is handed over a core function. Remember BPO is always concerned with international practice and not done domestically.

Thus, outsourcing is done in the case of noncore functions only. The motive behind both is to destress in case of limited resources or to improve profit by sharing a function. Companies facing stiff competition resort to many cuts, and often lay off several employees. Over-hiring is carried out in times of great profitability, it does not appear to be a financial burden during happier times.

When profit declines due to heavy cost burden or due to competition from the rivals the management looks towards apt solutions. The first step that major companies usually take is to lay off. While in modern economies and the developed world "lay off" is easy, it is not so in case many developing economies.  Labor laws can complicate matters after the layoff, and can create unprecedented liabilities.

Hence it is always wiser to hire with caution in many countries where layoff is not an easy solution. Recently we have seen a spate of layoffs by technology companies like Google. Although this act appears all hunky dory, it will not be the case where ever labor protection laws are stringent.

Hence it is always wiser to outsource non-core functions from the very beginning to avoid the saturation tap.  The workforce is important, but a wiser approach that is cautious while hiring can lead to a better future for the organizations.

For most companies, payroll management is a non-core activity. The process requires investment in many power for accounting and that manpower does not assist in core function. Thus, when the going is not good this every down-the-line staff may become a burden. Even though there is automation software like Spine HRMS large companies prefer to outsource payroll management.

Smaller companies can use automation software like Spine HRMS and manage employees' salaries. Spine HRMS is a comprehensive software and is equipped with many features that make it dynamic and holistic.  

Larger businesses and corporates with thousands of employees prefer to outsource payroll management to able companies. For these companies managing employees and HR is the core function and they specialize in that. Thus, companies benefit from the service provider's expertise, reduce employee burden, focus more on core functions and benefit immensely. However, this act should be carried out with caution as there have been cases whence the service provider has not been at optimum best or refused to co-operate.  

 Human Resource Management is Employee Management

The human resource department is for managing employees, and the acquisition of bright and experienced people. In any company, this falls under the HR Department. The department is manned by resourceful people who not only seek acquisition but also manage the people already employed in the company. Thus, HR management is a complex and comprehensive task and very important. The most important function of the department is to acquire staff for management and workforce. Another major function of the staff is to manage employee salaries their perks and all finances related to them. With the introduction of application software and the rise in payroll management services, the traditional mode of accounting is reducing.

While most companies have in-house HR departments some companies outsource this to third parties. These third-party outsourcing companies specialize in employee salary management.  Another option is to automate salary management using application software. Both options are fine usually large enterprises prefer to outsource payroll services to third parties.  There are many benefits to outsourcing. The parent company saves not only the cost and efficiency since the third parties skilled management in their company.  With the burden of managing employee salaries over, they can focus more on their core functions.

Overall Technology market size in India was 1.1 billion USD in the year 2021. With companies changing their business strategies in favor of outsourcing, the growth rate is expected to increase rapidly. The robust marketing technology figures are promising for HR Technology Sector.

Spine HRMS Suite

Spine HRMS software is developed by Spine Technologies based in Mumbai.   The company has also developed software in line with human resource, and enterprise management.

Some of the features of the application are endowed with are:

• ·         Payroll Management
• ·         Leave Management
• ·         Claims & Reimbursement
• ·         Performance Management
• ·         Recruitment
• ·         Visitor Management
• ·         Workflow Supervision
• ·         Attendance
• ·         Time Sheet

The application software is endowed with many useful features. Spine grows along with the industry and keeps to the required specifications. It is regularly upgraded and it easily integrates with MIS And ERP systems. With the development of HRMS and other software, Spine is one of the leading companies in India.  The product is endowed with all features that a Spine HRM system should have. It is customizable, integrates well with MIS, and allows the user to view their salary and breakdown. Employees can change their personal and professional biodata with the knowledge of the HR Department. These facilities are accorded in the EES feature. The PMS feature allows companies to track their workforce performance and reward them accordingly.   

MetavisionTechnology based in Mumbai is a qualified implementation partner. It also provides third-party outsourcing services in Mumbai and all over India. The company is a technology leader and also develops application software like F-1 MIS. It is equipped to provide training and AMC Services to all the products it deals in.  

BPO or Outsourcing

There is a difference between BPO and Outsourcing, although the line between them is thin, the definition is clear.  BPO stands for business process outsourcing where the core business is outsourced to a business process service provider. In the case of outsourcing as we understand noncore business processes are outsourced. BPO always deals with core functions. Thus in this case the businesses remain involved with the core functions that the BPO is handling. The BPO is always outsourced internationally. 

In the case of outsourcing noncore functions, there is an arrangement with the provider whereby sharing of data, MIS, and communication takes place. Thus the sharing is limited but impactful. In the case of BPO, manufacturing process, equipment and technology may be transferred. There may be regular supervision of services or the quality of finished products. 

Both services have the same purpose. They facilitate companies to delegate processes that may be proving stressful to their limited resources or they can afford to approach a service provider and get the load off for certain gains.  

The main Benefits of these processes are:

• ·         Cost Reduction
• ·         Stress Reduction
• ·         Expertise Gain
• ·         Enhanced Efficiency
• ·         Increased Production
• ·         Seasonal Production Enhancement
• ·         Risk Reduction
• ·         Doing Away with Statutory Compliance

Payroll Management Types

• ·         In House
• ·         CPA Managed
• ·         Bookkeepers Managed
• ·         Agency Managed
• ·         Software Managed

Although the picture appears eternally rosy there are associated risks and failure. Hence company CEOs and managers take cautious steps before finalizing the contract. There is always less chance of risk or failure for those enterprises who have been doing it for years or at least for some time. The reason is trust, acclimatization with the process, and time-tested service.

For new concerns seeking outsourcing of noncore services or BPO, the risk is dependency, loss of control, frequent quality issues, and other hindrances like improper communication and even disputes. The matter can go to court and linger for years. Many functions can be handed over to service providers and payroll or employee management is one of them. 

Outsourcing Payroll Management Service

For most companies, payroll management or employee management is a non-core function. It can prove costly to manage within an organization or take a heavy toll on the staff or stress other resources. While some companies use software applications like Shine HRMS for automation others prefer to hand over the task to service providers.

The future for services in payroll management for companies that outsource is bright. The market size for the year 2021 is 9.9 billion dollars. It is growing at a rate of 7.2% and is expected to reach over 19 billion dollars by the year 2031. The pandemic played a major role in outsourcing payroll management to service providers. This happened with work from home concept due to the need to keep away from the office. The growth in the last five years has been over 15% CAGR in India.        

As the business paradigm experiences a change outsourcing services are becoming common. While a significant number of companies are resorting to managing employees using software like Shine HRMS many approaches the agencies. Agency-managed service providers are quite common in India.   

Pharmaceautical contract manufacturing

Contract Manufacture is utilizing third party manufacturing facilities to make products. This is more popular strategic practice among pharmaceutical giants. Drug manufacturing facilities are utilized mostly in third World countries like India  to manufacturer company owned drugs. 

In pharmaceutical industry as well as in other industries this a business strategy. The multinationals gain from the low cost of manufacture due to cheap man power. Sometimes hazardous chemicals and drugs are also manufactured in this manner. 

The organizations that broker deals for contract manufacturing are also instrumental in feasibility study. The development concern offers large number of related services besides manufacture. In case of pharma industry clinical trials at all stages, method development pre-formulation and formulation and commercial production is included in the contract. Most of the contract manufacturers in India are able to gain from this business strategy. For some it works in a way by utilization of their spare capacities.           

Indian companies have become main pharmaceutical outsourcing for API and key intermediates  for US and European concerns. The country has a strong manufacturing base and technical competency besides cheap manpower. These are the right ingredients that parent companies in developed countries seek.     

Global pharmaceutical giants gain most from cost cutting and by not investing in infrastructure. Buy outsourcing pharma projects companies can remain lean and thin. They are able to focus on core activities and mega projects.