Payroll Outsourcing VS Employee Outsourcing – Why It Is Good For Your Business

What is Payroll Outsourcing?

Payroll Outsourcing is the act of hiring a third party professional to handle all payroll administration of your employees. By doing so, your organisation can save time and resources and thus be able to focus on more important business processes.

What Payroll Functions can be Outsourced?

Like most services, payroll providers may customise their offerings according to your needs. And here are some common services that payroll providers offer.

  • Determining pay (including benefits and reimbursements)
  • Making deductions to taxes and others (retirement contributions)
  • Paying employees
  • Keeping payroll records

Benefits of Payroll Outsourcing

By outsourcing payroll, you take the mundane tasks of calculating employees’ pay off the hands of your HR team. This saves valuable time, enabling your HR team to focus on other duties beneficial to your business functions and better leverage on your human capital. Even so, is payroll outsourcing the best option?

Go Beyond Payroll Outsourcing to Stay Ahead of the Curve – Employee Outsourcing

COVID has hastened the pace for change and the journey to revamp HR functions to enhance productivity. Read on to find what Employee Outsourcing has in store for you!

Diagram: Business cycle of Employee Outsourcing Service

What is Employee Outsourcing?

Employee Outsourcing or staff outsourcing is the act of engaging a firm to be an Employer of Record (EoR) to hire employees, manage them and their payroll on your organisation’s behalf. By engaging an EoR, the organisation will be fully responsible for the employee’s compensation, job scope and daily responsibilities. In addition, the EoR helps to recruit talents of the right fit, manage and pay them as their employer, saving your organisation much time and effort from administrative work. Helping you to hire and manage the right talents are the key advantages that enable employee outsourcing to triumph over payroll outsourcing.

Payroll Outsourcing VS Employee Outsourcing

Payroll Outsourcing Employee Outsourcing
Payroll and Payment Processing
Determining pay (including benefits and reimbursements)
Making deductions to taxes and others (retirement contributions)
Paying employees
Keeping payroll records
Manage Benefits & Claims
Leave Claims
Medical Claims
Maternity & Child Care Claims
NS Men Make-up Pay Claims etc.
Conduct and Submit Annual Tax Filing for Employees
Recruit and Manage Employee
Sole Employer of Employees
Not Available
Craft & Manage Employee Contracts
Not Available
Onboarding & Offboarding
Not Available
Collating and Processing Time Sheets
Not Available

Table: Payroll Outsourcing VS Employee Outsourcing

Why is Employee Outsourcing the formula for success?

Business process outsourcing which includes employee sourcing that also encompasses payroll outsourcing has a global market size of USD 245.91 billion in 2021. In which, this number is expected to grow to USD 435.89 billion by 2028. Many MNCs have also recognised the potential and benefits of employee outsourcing to allow them to scale to greater heights more efficiently. Did you know that WhatsApp employs only 50 employees, with most focusing on customer service and outsourced the rest of the technical and development team? This is one of the secret formulas for companies to optimise their businesses for success.

Additional Benefits of Employee Outsourcing Services

Cost and Time Saving 

Similar to Payroll Outsourcing, Employee Outsourcing frees up time for your HR team to do activities that will value add to your organisation. Additionally, it allows you to build a lean HR team, saving on the training and opportunity costs incurred for the HR to administer sourcing for talents, payroll and benefits functions. Additionally, employee outsourcing also allows you to build a team of skilled employees without incurring the costs of adding full-time employees and additional costs such as office space. In fact, Employee Outsourcing will save you so much effort in having to handle the many contacts, networks, organisations when dealing with recruitment as compared to just engaging in payroll outsourcing.

Regulation Compliance 

Allowing a local EoR with the expertise and knowledge of the latest Government initiatives and regulations to manage your employees means that you do not have to worry about falling behind the latest Statutory Compliance Requirements changes. This saves you the time and effort to consistently update yourself on the latest regulations and direct your time to more meaningful work.

Risk Mitigation

As professionals in payroll management, the EoR is equipped with the best state-of-the-art payroll systems to manage your employees. This may mean better security and a system to house your employee data. In addition, EoRs can help to eradicate the risk of delayed payments and ensure that your employees will always receive their salaries on a timely and regular basis without error.

Things to look out for in Employee Outsourcing

Less Fit With Company Values

As employers, you are not only looking at hiring skilled talents to fit the job, but also one of cultural fit. With outsourcing, you may have talents with much expertise, but you would have lesser opportunity to impart and share the company’s vision. Thus, if the outsourced employee stays for a shorter term, he might have a lower commitment towards your company’s vision.

Less Consistency

For temporary outsourced employees, the downside to having the flexibility of having an extra pair of hands needed is the reduced consistency. For example, if you outsourced customer service staff, you would have to train them about your company’s standards and products. You would then have to constantly retrain these temporary outsourced workers when they come on-board. While they would still complete the job, it reduces the consistency of the service provided. Client retention equals business sustainability. What clients look for is consistency, ensure consistency and don’t cut corners to compromise your business!

Businesses, big or small does not matter

The benefits of engaging Employee Outsourcing services apply regardless if your organisation is a well-established conglomerate, overseas business venture to Singapore, or a start-up. The seamless experience an Employee Outsourcing agency can provide – from hunting the team, hiring and recruiting them, managing them as employees to off-boarding, is both cost and time-efficient. Through this HR solution, the HR processes required for your organisation are simplified, and your HR team can now focus on other functions to bring your organisation to greater heights.

Short-term Employee Outsourcing Services is available

Employee Outsourcing can also be applied to a specific niche talent or a project that you need an extra pair of hands for the short to medium term. Once the project is completed, you may terminate the service.

Why choose Citadel Search as the Employer of Record?

Instead of payroll outsourcing, Citadel Search provides employee outsourcing, offering you the full spectrum of services, taking care of everything from recruiting to off-boarding of the employees, all of this at competitive valued pricing. With over eight years of experience as EoR, we can effectively customise our service to meet your tax and invoice submission schedules, only requiring monthly documentations from you.

If you feel that there is a need to get assistance for your HR processes, contact us and have a chat with us, we are here to accommodate your needs.

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