Lowering the Total Cost of Ownership for HR Processing

Do you know how much your organization is really spending on HR processing? You may be spending more than you think.

While all organizations strive for top-line growth, it’s the bottom line that needs to be managed and that usually means limiting expenses operating budgets in ‘overhead’ departments. A recent PwC/ADP report looks at the different cost drivers of HR processing (payroll, time & attendance, HR data administration and health & benefits) and reveals that most organizations do not capture all the associated costs, failing to address these across people, processes, and technologies. When a holistic approach is used, taking all three areas into account, several factors which use up ‘time and resources’ are identified and the true total cost of ownership for HR processing becomes significantly larger than first calculated. The opportunity exists to significantly decrease these costs, to achieve efficiencies and streamline workflow in parallel.

Various options exist for HR processing – small companies, tight on funds, often opt to continue their “manual methods”, while mid- and large-sized organizations may have automated Human Resource Information Systems (HRIS). Enterprises, however, tend to fare better given their ability to leverage economies of scale and employ junior-level staff for data entry (not to mention their ability to afford HRIS in the first place).

Even so, HRIS is quickly becoming yesterday’s choice as new applications leveraging software-as-a-service are proving to be extremely cost-effective, and unlike HRIS, represent an operating expense as opposed to capital – making it affordable for companies of all sizes. Even more notable though is that outsourcing more than just one process yields better savings. Outsource just payroll, and your total cost per cheque is approximately $19 as compared to $22 on an in-house basis. Outsource both payroll and time and attendance, and your costs go from $39.82 to just under $28 per employee.

In Exposing the hidden cost of Payroll and HR Administration, A total cost of ownership study, one of the key findings was that customers of ADP’s SaaS solution experienced a decrease of 19 per cent in processing costs, in addition to realizing on efficiencies and streamlining workflow over the cost of their in-house HRIS. Organizations that outsource spend three times less on implementation and save on maintenance costs.
To learn more about HR outsourcing and the strategies that allow some organization to better cost-effectively deliver these functions and lower their total cost of ownership, download the full study.