Transforming Payroll and Human Capital Management through BPaaS

By Mark McWilliams

Generally, businesses find their time and ROI are highly correlated; it is rare to find an opportunity to obtain significant returns without a large investment of time or resources. This rule is debunked, however, when you apply the Business Process as a Service (BPaaS) model in order to dramatically increase operational efficiency. By outsourcing processes that are expensive or inefficient to highly-specialised, third-party organisations, you can reduce total operating costs while putting time back into your employees’ days. In turn, you can invest these savings in important strategic goals, fostering company growth and attracting top talent.

BPaaS can be advantageous when used for both standardised and strategic processes, such as payroll and human capital management, respectively. While using BPaaS for standardised processes like payroll allows for greater savings, BPaaS brings greater efficiency to complex processes like HCM.

Managing payroll through BPaaS

Payroll is perhaps the best example of a function that can be revolutionised through BPaaS; it holds little strategic value, but is a necessary component of business operations. The primary goal of payroll, rather than to gain an advantage over a competitor or increase revenue, is to pay employees in a correct and timely manner. Especially for small businesses, the costs of operating a payroll department can be exceptionally high, and could be better served by a trained, external provider. Recent research shows that most organisations are unable to achieve best practice benchmarks in managing their payroll internally, with most delivering an efficiency rating less than half that of a well-run process. Further, the pricing difference between performing payroll in-house and using a BPaaS solution can be as high as 70 per cent.

Savings alone aren’t the only advantage of BPaaS, however. BPaaS is also an attractive option for businesses that otherwise struggle with certain aspects of their operations — be it due to a lack of technical expertise or training, small staff or outdated IT infrastructure.

Human capital management

As I noted in my last post, BPaaS can also successfully optimise strategic business operations. Take, for example, a business’s hiring and talent management operations. While these are typically functions over which organisations desire a high degree of control, they do not necessitate performing them completely in-house.

By using BPaaS to manage processes such as talent acquisition, organisations can tap into a much wider range of potential employees and establish a rigorous, yet standardised, recruitment process. From a talent management perspective, BPaaS providers can help an organisation set up and facilitate onboarding procedures, defining role competencies, regular performance and development reviews and succession planning. As a result, businesses may not only reduce hiring costs and attract talent faster, but also learn more about current employees’ strengths, weaknesses and untapped potential — making for a much more agile, thriving company.

With these advantages, businesses can expect to become more competitive, better-positioned to achieve their strategic goals and faster innovators. By outsourcing payroll and human capital management functions to specialised providers, organisations significantly reduce their overall expenditures while increasing operational efficiency. Through BPaaS, a business can remove its weakest link, eliminating the burden of tedious processes and strategically redirecting revenue streams.

Mark McWilliams has 25 years of experience in the technology sector and is Director of Datacom Investments.

He has detailed knowledge across the IT spectrum from data centres through to governance, with everything in between. He has also worked with organisations that have varying needs from a security standpoint, including those with advanced requirements such as banks and government agencies.

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