The online Etymology Dictionary notes that the first records for the use of the word, payroll as a compound word (pay + roll) appeared around 1740 to describe the money paid to employees for work done over a period of time.
The word, outsourcing, according to the Etymology Dictionary states to “obtain goods or a service from an outside or foreign supplier; contract work to an outside entity”.
These two words become very powerful when taken into context with its existence and growth, since the start.

Fast forward to the current economic environment, more and more companies are moving in this direction in their endeavour to minimize operational risks and to focus on their core business.

The SME market specifically benefit from the payroll outsourcing framework as it specifically reduces legislative compliance risks, costly resources and time spent to ensure all employees are paid correctly and on-time. All things, companies can ill afford.

Internationally the trend to outsource the payroll function has grown substantially and, in the U.S., between 39% – 43% of all companies outsource some or part of their payroll functions.

Over the last decade there have also been many changes to the payroll environment. The days of appointing any random person who seems to have a few minutes spare to assist in preparing pay packets for employees are long gone.
Although South Africa has taken a long time to develop learning interventions for payroll specifically, there are now accredited institutions that provide formal qualifications (some internationally recognised) in the form of either a diploma or degree.
However, as the level of education (skills level) increases, the income requirements and cost to the employer increase for these resources.

Because outsourcing service providers have economies of scale, they use qualified expert resources to assist companies with payroll functions at a much lower cost than the Company having to appoint.

Finding the right service provider is very important, and therefore companies should follow a rigorous process to secure the services of a services provider that:

  • Is committed
  • Has integrity in the way they handle business and operations
  • Value and respect the opinion of their clients
  • Deliver exceptional service – you pay for the service; you should get what you expect
  • Does not mind walking the extra mile to assist a client
  • Are reliable
  • Are results orientated
  • Are professional
  • Have expert resources

The benefit of outsourcing is endless and in fact growing exponentially. The prospect of giving an external party access to your employee information might sound daunting but the benefits far outweigh the negatives. The right partner can be a added value to your business focus and strategy.

As Alphonso Jackson quoted: “The other part of outsourcing is this: it simply says where the work can be done outside better than it can be done inside, we should do it.”