Question

Recent trends in out sourcing business functions have meant that many organizations contract with payroll processing firms to administer their payroll systems. This is particularly true for small to medium sized businesses.

With this trend in mind, please relate your thoughts and comments to one or both of the following topics:

1. If you have been an employee of a business that has out sourced its payroll functions, please comment on your satisfaction with the administration of the payroll system.

2. Comment on your personal views toward the out sourcing of the payroll function. Relate what might be advantages and disadvantages to the business that decides to have an outside company handle their payroll

Answer 1

Ans:- It is true that because of the boom in the outsourcing industries in the recent past companies tend to hire vendors for their various business functions because of the lack of time expertise and in that one is payroll system handling especially for small and medium-sized industries.

Ans-(1) If I am an employee of a small business firm or any company that has outsourced its payroll functions I should be happy as long as I get my payment on time which usually happens when the company has outsourced its payroll services because these companies have teams of experts which deliver their services in time. The only thing which will bother me is my personal data which has been shared by the company.

Ans:-(2) Personally, in my opinion from the management perspective, there are a lot of advantages to outsourcing payroll services

(i) Saves time and increase production: It saves a lot of time for the management which can be used in enhancing and upgrading core functions and services of the business.

(ii) Reduce costs: It reduces the direct cost of the company for processing the payroll functions.

(iii) By outsourcing the payroll functions companies can avoid IRS penalties for a small business that they pay for late processing of payment or incorrect fillings.

(iv) often small businesses and firms do not have expertise in payroll functions of the business and their changing norms so it is better to outsource them.

I believe that there are certain disadvantages of outsourcing payroll services.

(1) Breach of data: It is one of the biggest disadvantages of outsourcing services because all the employee's data you have to share with the outsourcing company and it is always risky if it falls in the wrong hands.

(2) Lack of company identity: Most of these outsourcing companies handle their services through call centers and most of them are also new to the market and also they run their business in a lower-cost country which might not be known to the management. so it is always risky to do business or share any information with these types of companies.