Achieving Efficiency and Transparency in Payroll and HR Through Outsourcing

The worldwide HR and payroll outsourcing (HRO) market is expected to grow to more than $30 billion by 2009. We can see that BPO solutions are becoming more strategic for companies and can deliver a multitude of benefits from cost control to process efficiencies for large organizations.

Russia has always led the region with respect to outsourcing, but growth initially was fueled by foreign organizations seeking to minimize the complexities of local payroll legislation. Today, we are finding that not only large multinational organizations present in Russia are looking to outsource as a strategic initiative, but also many Russian enterprises from the industrial and retail sectors are starting to embrace HRO as an integral part of their long term growth strategy.

As the size, scope and complexity of HRO projects increase, it is imperative that both the client and the supplier work together to maximize efficiency and transparency in the HRO process. Let us first take a quick glance at the advantages and potential challenges in HRO. As enterprises look to HRO as a part of their long-term strategy, they should consider the following.

HRO can deliver:

Reduced cost

Increased efficiency

Access to best of breed HR/Payroll software solutions

Expertise not available internally

Reduced risk, HRO providers have professional liability insurance

Potential challenges include:

Companies should not outsource what they do not understand

Standardization of processes and procedures done in accordance with the provider, not the company's preferences

Managing the transition from internal processing to HRO

Recurrent management/monitoring of the HRO relationship.

Yes, through outsourcing, you can rapidly and successfully achieve efficiency and transparency in your payroll and HR. As with any partnership, it will require a level of flexibility and commitment from the client as well as the HRO provider. Two essential aspects to achieving efficiency and transparency are process and procedure standardization including Employee Self Service (ESS) and Manager Self Service (MSS).

Standardization can be considered the key element in realizing the advantages of HRO. Providers are in a much better position to apply standardized and proven approaches to managing HRO tasks, utilizing experience and technology. Companies subsequently need to be in a position to accept the procedure standardization from their provider, if not, they risk loosing the ability to maximize outsourcing potential. Very directly, the more standardization to monthly processes, the easier it will be to minimize HR process cost per employee. This is a benefit to both the company and the provider. In addition, this will enhance monthly coordination.

Access to best of breed software solutions is fundamental when selecting an HRO provider, and ESS and MSS functionality should form the core. ESS, basically, brings the employee directly into the process. Employees using specialized portals can input their own timesheets, apply for vacation, verify their personal data and print monthly pay slips. By putting the administration of payroll data into the hands of employees, companies can re-assign the management and workload required, all the while increasing or at the very least ensuring accuracy.

As with ESS, HR or line managers through dedicated portals can validate employee submitted data, generate key reporting, as well as manage the leave requests submitted electronically.

By combining standardization, ESS and MSS, along with a centralized software solution delivered by the HRO provider, large enterprises spanning Russia or the region can quickly achieve efficiency and transparency across their organization.