Payroll Strategies for the Year Aheadadmin
According to the Willis Towers Watson Survey that conducted in 2019, salaries in India are projected to rise by 10% in the year 2020, and sectors like manufacturing, chemical, tech, and pharma are expecting salary increases by 10%. Sectors such as energy, financial services, and consumer products will see the highest year-on-year growth.
Given that various sectors are primed for growth in the year ahead, the market becomes
extremely competitive as organizations will look to make strides to stay ahead of the competition in their respective sectors. Payroll happens to be the area where most organizations heavily invest in. In some cases, organizations have invested up to 60% in payroll.
According to a report, the global payroll outsourcing services market, the analysis showed that the global payroll service outsourcing market would have a steady growth till 2021 as there is a need to reduce in-house payroll-related costs to most organizations. This has acted as a catalyst for the growth of this industry.
Most organizations have begun to look at outsourcing as a strategic move. The Grant Thornton International Business Report (2014), 40% of business leaders have agreed that outsourcing is a popular option.
According to another report by business.com, the estimated value of human resource outsourcing will touch 43.8 billion USD due to the changing needs and requirements of an organization as well as a change in protocols, market demands, and so on. Changing labor laws has also helped in the growth of payroll processing services, given that compliance is now taken very seriously.
Factors Influencing Payroll Outsourcing Costs
Several factors determine payroll outsourcing costs:
- One of the major factors influencing payroll costs is the kind of features that organizations would like to make use of from the best third-party payroll company. The number of employees is a key factor that influences payroll outsourcing costs is the number of employees per organization. Most payroll processing services charge per employee.
- The industry of the client organizations is also another factor that is involved in determining payroll outsourcing costs.
- Corporate payroll services mainly look to ease the burden on managers and companies so that they can focus on growth and expansion.
Challenges and Strategies
Payroll outsourcing services usually have their work cut out for them when they take charge of an organization’s HR functions. Below are some challenges and some strategies faced by different sectors when faced with challenges:
- The manufacturing sector is a direct indication of the growth of an economy. However, the industry faces a shortage of skilled workers with hiring problems. Other issues include heavy competition and ineffective training and development. However, by streamlining the hiring process or outsourcing it and making it accessible for a younger workforce like millennials, the manufacturing industry is taking steps to ensure better talent. Better pay and training and skill development programs do help in this regard.
- The retail sector faces issues such as poor communication, the staff’s working hours being subject to shits and change, and so on. Only managing payroll may not suffice. The management, as well as the third-party payroll service, must work in tandem and ensure that all employees are satisfied and work together objectives that are aligned.
- The finance sector will face major issues related to compliance, account management, and a lack of talent if in – house HR management is ineffective. Therefore, focus more on growth without too much effort or attention on HR tasks; those tasks are outsourced to third-party payroll vendors.
- The tech industry also faces challenges like the manufacturing industry: obsolescence, changing technology and protocols, lack of skilled talent, and so on.
Given that payroll services and corporate payroll services have been an asset to various sectors, it seems like another industry, by itself, poised for growth.