Outsourcing Payroll Can Mean Major Cost Savings

There are any number of reasons why businesses choose to go with outsourcing payroll. Surveys have found one thing - that almost nine out of ten businesses, when they choose to outsource, do it to save on the cost of maintaining an in-house department. While they save considerably on the hassle, that doesn't really figure that high on their list.

So if you are considering outsourcing payroll at your company, chances are, that your company is interested in it for the cost savings, too. But is it possible that those kinds of savings will really not come your way? Are those cost savings real or illusory?

Well, outsourcing payroll, without doubt, can save a business money - up to 20%, by most accounts. But it really depends on the exact circumstances of the company in question. Not every company will stand to save as much.

Let's look at what those circumstances might involve.

The first circumstance to consider is the size of the business. The bigger the business, the more they're going to need to spend on maintaining a payroll department. They are likely to see huge savings in absolute terms. Small businesses are likely to see savings too even if they won't be much. For a small company though, the savings can truly mean a lot more.

Payroll usually falls within the HR department in most businesses. If outsourcing payroll becomes a point to consider, companies should begin to think about outsourcing the entire HR Department. They call it HR BPO, and the savings can be great. When a business decides to go the whole hogand outsources the entire department, they can expect savings of up to the third. That can mean quite a lot in these times of financial difficulty.

Companies might wonder - if they were to run an in-house payroll department, but if theyh equipped it with cloud computing software instead of on-premise software, would the savings achieved make outsourcing payroll unnecessary?

Not exactly. Major studies done on the matter say that while you can save something this way, it's nothing compared to completely outsourcing payroll and everything else.

The reason many businesses fail to consider outsourcing payroll for the cost savings seen therein is that they don't correctly calculate what it's costing them to maintain an in-house department. If theyy would only take everything into account, they would quickly see how spectacular the savings can be.