Business Process Outsourcing (BPO) raises many questions both on the pro and the con’ side. The situation is the same as payroll outsourcing. Either we are talking about changing payroll service providers or outsource the payroll processes, we need to consider the following issues before deciding:
- improving the processes and administration affecting the efficiency of the whole company
- reorganization of human resources
- role of IT, optimization of technology costs
- consideration of responsibilities
Before the tender invitation – Where to start?
When the need arises for outsourcing the payroll and HR administration processes or change the current service provider, it is important to start the tender with specific demands. It’s necessary to investigate the current processes of the company, the technology, resources and needs.
It can also happen that we would like to outsource only parts of the entire process, in this case it worth considering the possibility of onsite outsourcing.
It’s a good idea to share the exact mapped needs in written form with the potential payroll partners, and this way ensures that the offers really cover the expected tasks.
Previously László Kovács, Payroll Manager of BPION put together a list including 10+1 effective tips for putting together a payroll tender invitation.
It is important to think about timing. In case of outsourcing Payroll and HR administration processes we need to consider whether we would like to start in January at all events, or mid-year change of the service provider is also possible.
Depending on the task and the company’s specialties, the selection process can take up to a few months, and we need to count on the duration of the implementation as well, which also takes 1-3 months.
Criteria of an effective payroll service provider – Objective aspects
1. Experience and market awareness
Choose a prepared supporting team with a wide range of professional and industrial knowledge.
2. Data security
Although, in theory, everyone should have GDPR compliant data protection systems and processes according to the European standards, unfortunately, in practice, this is not always the case. In addition, the issue of broader IT security is also very important. Be sure to investigate these issues as payroll data are one of the most critical information in the life of the company.
3. Professional liability and SLA
Define KPIs (Key Performance Indicators) according to requirements from service providers and place them in a SLA (Service Level Agreement) document. This ensures the expected service quality and that deadlines are met. However, anyone can make a mistake. But in this case one mistake can cause serious financial consequences for the client, so let’s do not contract with a payroll provider who does not have proper professional liability insurance.
4. Technology, IT background
Digitalization is very important in case of payroll services, similar to other business processes. With a well-built technological background, significant improvements can be made in both quality and cost-effectiveness. Choose a partner who can increase our sense of security in the field of technology with its solid knowledge base and experience.
5. Service fees
Fees of payroll service outsourcing can move within a very wide range. It depends on the headcount, the complexity of the industry where the company operates, technological and reporting system requirements. In general, we recommend that looking for value for money instead of the cheapest solution. In addition, you need to consider which part of the service worth monthly fee and which hourly fee. In order to decide, you need to have a very precise process description which includes also time spent on each sub-task.
Record the communication flow and the participants in the contract, strive for a single point of contact communication!
Ask those who have already chosen a particular service provider and have an insight into their daily operations. If the industry in which we operate has payroll specialties, feel free to ask for similar experiences of the service provider
Remember that deals are actually concluded between people, not between companies.
It is strongly recommended to ensure the possibility of personal meetings even in the early stages of the tender. For a trusted service, it is important to see the human side of the service provider, who are the faces behind the numbers and who will communicate with us on a daily basis.
How customer-centric and flexible is their behavior and what are their attitudes?
Business processes are based on “best practices”, tried and tested standards, that’s true. But every client can have features that need to be built into the service structure in order to create real value and benefits to the organization. Never accept “take it or leave it” solutions!