The Hidden Agenda of Outsourced Payroll Providers
Not only payroll companies charge checking and account fees, within each check income tax are withheld which is then sent to the Internal Revenue Service or the IRS. They let the tax revenues of the employees in their accounts till the eleventh hour which helps them gain the interest on that amount while the money is in their account. This can turn out to be a huge amount if you consider your employee strength over a period of time.
Control of Information
With in-house payroll, the organization concern of security is better met. The entire data containing highly sensitive information such as the compensation and benefits policies and packages of the employees is within your database itself rather than parking it at the payroll provider.
This way organization can also choose to limit the access of the payroll components and the software will be controlled by only those who are required to do so.
Control of the Process
In-house payroll also implies that the manager has the control over the payments for the employees which would require accommodating changes based on shifts, overtime hours that are spent by employees which otherwise an outsourced provider may charge extra fees or force penalties or even delays and complication due to these changes in the work hours in the company.
Control of Data and Reporting
When the system is in house, it is easier to access and analyze the data using the reporting tools used in the organization. Since different components of payroll, costs, trends from cafeteria approach, utilization of resources. Using data warehousing and business intelligence, this information can act as a strong tool to make important business decisions for the future.
Integration Means Less Data Entry
Data integration is much easier when the system is in-house, that is with the other paper work, and even historic file works of the organization. If not, important data may get lost in the process and may pose some migration issues.
A 2003 PWC study points that the in-house cost for such systems may actually be much more expensive and higher than the organizations realize. This also means that in-house systems are necessarily the best strategic decisions for the company and they should base the decision only after having analyzing from different perspectives.
The definition of Total Cost of Ownership (TCO) encompasses not just purchase and installation, but the additional costs associated with owning and maintaining a system – as well as opportunities for improving service levels. As the first study revealed, those additional costs are the danger zone where low TCO becomes elusive and increased productivity becomes expensive. Outsourcing with ADP not only helps make costs more transparent, but offers scale economies and service synergies that result in a lower TCO.
The study shows that the average payroll TCO for an year for ADP - $10. This is thirty five percent lesser than the $16...