Global Industry Analysts released a research report on the 9th of February concerning the continuous growth in the HR outsourcing industry. The report considers that, with the global economic slump, cost saving has turned out to be highly critical for business service management Malaysia with emphasis on smaller investments in outsourcing single processes, as well as enhancing the significance of HR outsourcing. Payroll is just one of the areas that are more commonly outsourced due to the inherent complexity of the function and the required accuracy as it is carried out.
In the meantime, a study conducted by PriceWaterhouseCoopers in association with ADP (NASDAQ:ADP) on February 1st precisely concentrated on the true, hidden costs that can be connected with payroll and HR administration when carried out in-house in comparison to when outsourced with ADP, or in comparison, to other outsourcing firms. As per the study, companies that keep payroll, workforce management, time & attendance and benefits management in-house use up on average 18% extra than those that are subcontracting. With larger organizations spending 27% more than smaller sized organizations and organizations using software vendors spending 32% more. The report further describes that in spite of speculation originating from substantial technological developments in payroll administration software, expenditures for payroll administration has gone up since 2003, in contrast to the belief.
Increase in acquisitions and partnerships among software and services providers have also been observed in the past few days. Provider of workforce management solutions, Valiant, declared on the 25th of January that it has bought provider of payroll & consulting services to the catering and restaurant industries, Payroll Computing Services in an attempt to grow its presence in the hospitality industry. The firm is trying to strengthen it's, "strategic commitment to increase market share on the Valiant platform of web-based Workforce Management Products (WFMP)". In the meantime, company Xcel HR declared on the 8th of February that it has bought Astra HR, attaining "rock solid support" for its payroll platform. Following closely after this news is the provider of payroll, HR and benefits outsourcing solutions, Paychex Inc's (NASDAQ:PAYX) accomplishment of its purchase of SurePayroll, a Software-as-a-Service payroll processing provider.
One nation that may quickly see obvious increase in payroll outsourcing is outsourcing destination India. The insurance regulator of this country, the Insurance Regulatory and Development Authority (IRDA), issued rules early this month about the outsourcing of activities among insurance firms. The organization stipulated that insurers must take the necessary steps to ensure that company's outsourcing activities should not result in internal control, business conduct or reputation being compromised. The IRDA recognized payroll management among others as a non-essential activity, and per se, will probably cause more business from insurance firms that are abiding by the IRDA and limiting outsourcing activities of essential functions.
Payroll administration services will, aside from seeing increased market growth, also likely see major advancements in process as competition also increases. Likewise with more companies choosing to adopt outsourcing over software solutions, more joint ventures and acquisitions between software and solutions providers will also likely be apparent. With outsourcing of non-essential activities becoming immensely popular, the estimated growth in the payroll outsourcing market may hardly scrape the surface on the depth of adoption of outsourcing of these types of services and the class of service that outsourcers can provide in the future.