HRO industry reports and interactions with experts reveal that the demand for payroll outsourcing is going up significantly. Even small enterprises are recognizing the benefits of outsourcing their payroll functions to an experienced service provider over doing it in house. The prime motive is to cut down costs and save time. As a trend, enterprises are seeing payroll outsourcing as a way to start their HRO journey. Rajesh Ranjan, says, “Buyers are typically outsourcing the more transaction-intensive processes such as payroll first and gradually adding the more judgment-intensive ones such as learning and recruitment.” Small enterprises usually have limited resources that needs to be allocated on wide array of business functions. Payroll, though an important function, is a time consuming, complex process that requires specialized skills. The rationale for outsourcing then becomes the fact that the time spent on it can rather be allocated to revenue generating functions.
According to GIA's Human Resource Outsourcing: A Global Strategic Business Report, payroll is one of the most common business functions to be outsourced due to the high degree of complexity and accuracy associated with the operations. The time-consuming payroll services require extensive knowledge about federal and state rules, and huge capital investment, which makes several companies to outsource payroll.
Foreseeing the growing demand in this space, service providers are implementing new technologies and strategies to keep up with the pace. Infosys recently introduced an integrated talent management platform called Infosys TalentEdge, which is aimed at addressing the entire HR life cycle of an enterprise and streamlining processes like payroll, attendance and so on.
Huge opportunities in the payroll outsourcing space is also leading to many merger and acquisition deals. HGS, an outsourcing solutions provider, has recently acquired HCCA, an HRO player, from 3i Infotech. The acquisition also includes the payroll processing activities of 3i Infotech in UAE and Gulf Council countries. Partha DeSarkar, Global CEO, HGS, stated in the company's press release, “This acquisition is a strategic fit as it provides us an entry into the HRO domain which holds great promise.”
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