This month Nick Southcombe addresses a reader query regarding rightsourcing, which is the careful and balanced consideration of the different benefits and disadvantages between ‘in-house’ and outsourced business functions.
Q: Our CFO has asked HR to consider outsourcing our HR and Payroll processes. How do we determine if outsourcing is right for our business?
A: There are many factors you should consider when determining whether to outsource non-core business functions or perform them within your business. Every business is different and there is not one solution for every business; the answer is in Rightsourcing.
What is Rightsourcing?
Rightsourcing is the careful and balanced consideration of the different benefits and disadvantages between ‘in-house’ and outsourced business functions.
Rightsourcing requires you to evaluate the cost of outsourcing and understand the potential monetary and productivity savings, expected process improvements and additional value that outsourcing can add that you may not be able to deliver ‘in-house’. Once you have done that you can compare these to your organisation’s business objectives.
What business activities can I outsource?
Many businesses choose to outsource their non-strategic activities. By outsourcing tasks your business doesn’t specialise in, you can access that industry’s most updated technology and processes. Your staff are then free to focus on more strategic and value-adding activities.
When deciding if a function should be outsourced, businesses need to analyse their value chain to identify core and non-core activities. Assess whether the activity can be performed better or cheaper by a supplier. If the activity relies on fast-changing technology or a rapidly changing market, outsourcing could provide your business with more flexibility in that area.
Understanding the scope of the service to be outsourced and having a clear vision on what you hope to achieve by outsourcing, whether that be monetary, productivity savings or greater flexibility, is essential to making the right choice.
What are my payroll and HR outsourcing options?
Payroll is a necessary aspect of all organisations, but it’s also a time-consuming use of resources that doesn’t add value to a business. This is why it’s common for businesses to outsource their payroll process which liberates their resources and allows them to take ongoing advantage of technological innovations.
Rightsourcing your Payroll & HR processes means undertaking a self assessment of your needs. A deep understanding of the critical processes to your business is vital.
The enterprise needs to determine what level of involvement they wish to have in Payroll & HR processes and which functions could be performed externally.
How do I choose a service provider?
Selecting a service provider that understands your needs and works in harmony with your management style is a key requisite for a successful business relationship.
It’s important to select a provider with a proven record for implementing solutions smoothly, on time and within budget. Finding out exactly what services your provider offers, and which features are vital to your business, will help you choose.
Consider the security and accessibility of your data. Find out if your business needs 24/7 access to data and whether it’s more suitable to have data stored on the premises or in a secure data centre. Could your staff benefit from Employee Self Service?
Outsourcing can bring many positive benefits to your business. Following a Rightsourcing methodology will ensure you find the service options that will bring the most value to your business.
Like to know more?
Frontier Software is partnering with the experts at ConsultPoint to present a webinar on Rightsourcing. It’s designed to help demystify this transformational business trend. To register or for more information visit www.frontiersoftware.com and select ‘Products’.
About the author
Nick Southcombe is General Manager, Frontier Software. (03) 9639 0777; frontiersoftware.com