Your 5-minute guide to outsourcing payroll processes
  • sponsored

Your 5-minute guide to outsourcing payroll processes

This content is brought to you by TMF Group.

From Excel sheets to employee self service. From a back-end office function to becoming more visible. Payroll has come a long way, but has a longer way to go especially in times of pandemic when time and budgets are tight, affirms Aileen Ng, Regional Lead for HR and Payroll in APAC, TMF Group, in this exclusive chat.

Payroll in Singapore was always seen as a traditional back-end function, with very little attention paid to it as long as employees were getting paid. This was up until recent years, with the push for more digital practices and online interaction with agencies such as CPF and IRAS, supported by government funding of software for SME employers. What also helped the evolution of payroll is the rising expectations of the new generation in understanding their payroll clearly and easily.

“These developments have helped motivate HR to move payroll from Excel spreadsheets to an employee self service (ESS) model, bringing the payroll function from the back-end to a front-line and more visible function,” affirms Aileen Ng, Regional Lead for HR and Payroll in APAC, TMF Group, in this exclusive interview.

With regulatory changes in recent years, such as for childcare or maternity leave, coupled with the requirements of the Personal Data Protection Act; payroll has come out of the shadows to take accountability for how the HR function is run and data is being protected.

That said, there is still a lag in terms of business continuity planning (BCP). “Just imagine: What if you have just one person processing payroll in your company, and that person has to go on sudden leave? So the payroll function today faces both the technical element (systems and networks) and the human element for organisations to consider during BCP.”

Additionally, the pandemic has brought about a greater push and urgency for organisations and payroll teams to digitise most of their payroll function - what Aileen believes will continue to be improved, as companies realise the far-reaching implications of BCP.

Going forward, she talks about why outsourcing helps when budgets are tight, key considerations when choosing a vendor, and more. Interview excerpts below.

Q With tight budgets on hand, why should HR still consider outsourcing the payroll process?

On the contrary, faced with ever-changing business deliverables and tight budgets, HR leaders are re-looking at every aspect of the business - and this includes payroll. Payroll outsourcing thus comes into the picture, given the time pressure and volume of work involved.

This time and energy of HR could be better deployed elsewhere on more pressing issues. So rather than hiring temporary staff to tide over a busy period, we observe HR opting to explore flexible contracts with vendors. Given that the common industry standard is an initial three-to-five year term, the flexibility to do a shorter contract plays an important role in this decision.

Q Flexibility in time period being one factor, what are the other factors HR should look out for while outsourcing payroll?

When considering outsourcing, strong clarity of objectives and outcomes is critical. HR practitioners should consider the following objectives:

  • Compliance and risks – Enhance BCPs for their payroll function, mitigate risks.
  • Data security – The highest standards in meeting personal data protection laws.
  • Technology – With the increasing expectations of employees, providing ESS facilities is a necessity. Most payroll vendors offer payroll outsourcing services bundled with such technology (e.g. e-payslip, e-leave, e-claims).
  • Process efficiency – Partnering with vendors to overcome resistance from stakeholders and make it easier for HR to accelerate its transformation.
  • Regional/global delivery model – HR teams with regional or global portfolios would seek payroll vendors who provide a single view of payroll data on a regional/global basis, and most importantly, with local expertise to meet regulatory compliance across all jurisdictions.

Q Why is total cost of ownership is a decisive factor for payroll outsourcing decisions?

HR must consider the total cost of ownership, that is. delivering the payroll function in-house - which includes the office space, IT infrastructure, software investments, etc. This should be compared with the total cost of outsourcing. For outsourcing, it is equally important to compute necessary costs such as the fixed contracted cost or exit costs.

HR often finds itself attracted to low-price offerings from vendors only to face huge variation costs during the terms and/or significant fee increases upon renewal. Thus, always ask for the fee adjustment basis and out-of-scope variation fee schedule.

TMF Group is ISO/IEC 27001:2013 and ISAE 3402 certified along with Outsourced Service Providers Audit Report (OSPAR) attestation for its Singapore operations, which closely follow the requirement of MAS Outsourcing Guidelines. To get in touch with the TMF Group team for support on your payroll  outsourcing process, please contact them via this form.

Photo / 123RF

Follow us on Telegram and on Instagram @humanresourcesonline for all the latest HR and manpower news from around the region!

Free newsletter

Get the daily lowdown on Asia's top Human Resources stories.

We break down the big and messy topics of the day so you're updated on the most important developments in Asia's Human Resources development – for free.

subscribe now open in new window