A comprehensive introduction on the working of global payroll outsourcing
Every business organization hires competent and skilled individuals to accomplish the strategic vision and mission set by management. Employees from […]
Every business organization hires competent and skilled individuals to accomplish the strategic vision and mission set by management. Employees from one of the most important and strategic stakeholders for any company’s business environment. It is the duty of every employer to ensure job satisfaction for employees, equitable work distribution, timely payroll processing and accretion of gratuity and pension benefits. This prevents high employee flux and labor turnover and promotes employee loyalty for business organizations.
Payroll is a specific management function or department that handles the accounting of the list of employees at any given point of time, and the recording of their dues payable. The payroll department also handles the timely disbursement of the salaries and other dues to employees. This department is all-pervasive, as every organization requires a team to handle employee payments apart from other HR (human resource) functions of recruitment and staffing. Global payroll outsourcing is the new buzzword in today’s times, with more and more businesses opting to adopt an outsourcing strategy to save time and costs.
Payroll management is a complex and specialized task, and this is a major reason why outsourcing is seeming to be the best bet for multinationals and large corporations across diverse industries. In a globalized business environment with advanced communication and work opportunities, employees are more open to working in various regions, as per their skill set and educational relevance. Job growth and higher compensation along with a more challenging work atmosphere prompt employees to willingly take up work opportunities even outside their home location or country.
Multinational companies with employees from different ethnicities and countries have to ensure legal compliances with respect to human resource norms and payroll processing, to enable work productivity and boost employee retention. By outsourcing the payroll function altogether, the management can focus on achieving more strategic objectives. The global payroll outsourcing is an emerging and growing market, with many European and American companies opting for the services of specialized payroll professionals to handle employee payments. The outsourcing market for payroll is estimated to grow at a CAGR of around 5 percent. The growth has been witnessed across regions and countries, as more and more companies are expanding the base to international locations. This implicitly leads to hiring across countries and brings the issue of labor policy management and payroll processing. This is the reason payroll outsourcing is becoming popular around the world.
Working on global payroll outsourcing:
- Record keeping: The company hired to undertake payroll processing is responsible for maintaining thorough records of employees, the number of fresh recruitments in the region/s specified by management, the number of employees retiring or exiting the company and the reasons thereof. Unless proper records are not maintained, proper payroll processing is a very difficult task.
- Time log management: Time logs of the relevant employees have to be recorded in order to calculate employee dues and for charging penalties if any. Most companies levy penalties on late entries, and leaves taken over and above the stipulated leaves allowed. Biometric and computerized time logs help agencies who perform the payroll function, to maintain adequate records for future reference.
- Checks and monitoring: Specialist agencies that conduct the payroll function also perform checks and monitoring on the records maintained by the client companies. At times, there can be errors and flaws in records, which then need to be verified and corrected by the company performing the outsourced payroll function.
- Other legal compliances and policy management: Payroll software is also available to enable quicker operations. Every nation has different payroll legislation and benefit plans, that the specialist agencies have to understand and ensure compliance.
The world has become flat, with business and commerce spread across nations. Employees have also become more adaptable to different work environments, and amenable to moving across regions for better work and pay opportunities. Companies are thus increasingly outsourcing specialized functions like payroll, information technology, and business development to external agencies. This brings greater productivity in these individual spheres, along with helping management to focus on core business functions.