Payroll Outsourcing VS Employee Outsourcing – Why You Need It for Your Business
What is Payroll Outsourcing?
Payroll Outsourcing involves hiring a third-party professional to handle all payroll administration for your employees. By outsourcing payroll, your organisation can achieve significant cost savings, increase efficiency, and focus on more critical business practices.
What Payroll Functions can be Outsourced?
Payroll providers can customise their services to fit your needs. Commonly outsourced payroll functions include:
- Determining pay (including benefits and reimbursements)
- Making deductions to taxes and others (retirement contributions)
- Paying employees
- Keeping payroll records
Benefits of Payroll Outsourcing
Outsourcing payroll can streamline your human resources operations by offloading mundane tasks like calculating pay. This is especially so if your work environment has complicated pay structures like various types of allowances, incentives, etc. This makes payroll administration a lot more complicated and complex.
By outsourcing your payroll function, it allows your HR team to focus on activities that add value to your business and improve overall efficiency. However, is payroll outsourcing the best option?
Go Beyond Payroll Outsourcing to Stay Ahead of the Curve – Employee Outsourcing
Ever since COVID 19, it 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, involves engaging a firm to act as an Employer of Record (EoR) to hire and manage employees on your organisation’s behalf. The EoR recruits the right talent, manages them, and handles their payroll. This service provides a broader scope than payroll outsourcing. They allow your business to leverage a global talent pool without the administrative burden.
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 when Whatsapp first started, they employed 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 as it optimises both operating and labour costs.
Additional Benefits of Employee Outsourcing Services
Cost and Time Saving
Similar to Payroll Outsourcing, Outsourcing Employees also frees up time for your HR team to do activities that will add value to your organisation. Additionally, it allows you to build a lean HR team. This saves on the training and opportunity costs incurred for the HR to source for talents, and administer to payroll.
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. Overall, in reporting, the department benefits more with measuring outcomes and productivity more effectively.
In fact, Employee Outsourcing will save you so much efforts in having to handle the many contacts, networks, organisations when dealing with recruitment as compared to just engaging in payroll outsourcing.
Regulation Compliance
Partnering with a local Employer of Record (EoR) who has expertise in the latest government initiatives and regulations ensures that your business stays compliant with Statutory Compliance Requirements. This relieves you of the need to continuously update yourself on regulatory changes, allowing you to direct your time and effort towards more meaningful and strategic 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 when Outsourcing Employees
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
The flexibility of utilising temporary outsourced employees provides an extra set of hands when needed, yet it may come with a drawback: reduced consistency. Take, for instance, customer service staff outsourcing. Each time new staff members join, there’s a necessity to train them on your company’s standards and products. While they fulfil their duties, this turnover affects the consistency of service delivered. Consistency is crucial for client retention, which directly contributes to business sustainability. Therefore, it’s essential to prioritise consistency and avoid shortcuts that could compromise your business integrity.
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 small business 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. 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 just payroll outsourcing, Citadel Search offers comprehensive employee outsourcing services, from recruiting to off-boarding, at competitive prices. With over eight years of experience as an EoR, we customise our services to meet your tax and invoice submission schedules, requiring only monthly documentation from you.
If you need assistance with your HR processes, contact us for a chat. We are here to accommodate your HR needs and help you cut costs while improving efficiency in your business practices. Whether you are looking for that niche talent for a mission or hire a whole project team that will disband after project completion and prefer Citadel Search to be a EOR, come talk to us.