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Digitalisation and outsourcing

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Digitalisation and outsourcing

Digitalisation is accelerating the outsourcing of many different activities. In HR, as in many other areas, specialists can be engaged to provide services such as payroll accounting, personnel administration and software maintenance. We shed light on the points that require attention and explain the advantages and drawbacks that companies can expect.

Professional Article from Beat Jauch / Externe Dienstleister 2022

For most companies, outsourcing ceased to be an unfamiliar concept some time ago. Certain key phrases often crop up in this context as globalisation proceeds. Examples include focusing on the core business, outsourcing or external purchasing of work that adds no value, and the use of cloud software in IT. Outsourcing is also a current trend in HR.

Security and minimising risks

Security is among the reasons most frequently cited for making use of outsourcing in the HR sector. It is absolutely essential for a company to make sure that its employees are paid promptly and correctly for their work. This is also what the employees expect. In many companies, responsibility for this function is assigned to a few individuals – so there is no leeway for failures or absences. Another factor is that neither the technical aspects of the Swiss payroll processing system nor its content have become any simpler. New statutory provisions must constantly be noted and implemented (relating to issues such as tax at source, short-time working, equal pay statistics and so on). It is a challenging task to acquire and retain the know-how and the right specialists for these functions in the company.

Nowadays, standardised systems open up the possibility of outsourcing payroll accounting processes so they are placed in the hands of specialists. Companies that have successfully completed this step gain many advantages: for example, their security is improved, they no longer have to be concerned about maintaining payroll software and they are always compliant with the law. Such companies also benefit from simple and transparent cost structures.

However, outsourcing also involves relinquishing part of the responsibility, and the company shares its own employees' sensitive salary data with the external provider. This can also be perceived as a risk. In any outsourcing arrangement, it is therefore important to build up mutual trust and to be personally acquainted with the partner and the individuals who are in direct contact with the customer to provide support. Open, transparent communication is a highly relevant factor. The employees who used to perform the tasks within the company should always be involved in the individual steps of the process.

Digitalisation is a game changer

Digitalisation has simplified many aspects of outsourcing. Several developments and trends have also been reinforced as a consequence of the coronavirus. Companies can benefit from modern software, especially for communication purposes. In HR, for instance, processes can be mapped digitally and performed by both parties via one software solution. On the one hand, solutions of this sort enable companies to digitalise their internal HR processes and, on the other, they simplify communication with the external provider.

This also makes it possible to outsource the systems and their complex maintenance, which is beyond the core expertise of most companies. This form of outsourcing is also popular with many companies.

A number of providers will handle not only the standard HR services but also the maintenance and updating of the payroll software that is used. In terms of IT, this allows savings on the costs of hardware, infrastructure, maintenance and servicing. From the technical perspective, a good modern Software-as-a-Service (SaaS) offering promises the customer that the software will continue to be developed, is legally compliant and potential for innovation can be exploited.

The cloud is the key to success

SaaS harbours exceptional potential for innovation, and modern cloud solutions adopt approaches that benefit both the company and the employees themselves. The development of conventional on-premises HR systems has given only limited consideration to the needs and wishes of the employees. However, the latest findings strongly support a simple fact: companies can operate with maximum success and sustainability if employees are treated not merely as a resource but as the company's lifeblood. Most companies have neither the know-how nor the capacity to produce IT solutions of this sort themselves; in this case, they can turn to established cloud solutions.

What is the goal of outsourcing?

If we consider the conditions that must be met for the successful use of external HR service providers, the primary question that arises is this: Does the company have a clear idea of what tasks or processes should be outsourced and why? It is also important to map out how the company hopes to make life easier by taking this step: by cutting costs, overcoming staff bottlenecks or compensating for a lack of internal know-how.

During discussions, customers often express a desire to minimise risks. Once the fundamental issues have been clarified, the next step involves operative integration of the desired service. From the outset of this phase, it is worth investing great effort in trust as well as transparent communication. This can be supported by an HR service-delivery solution, but must function smoothly on a basis of partnership in every case. The processes must be neatly integrated in both organisations. Experience shows that the first step taken by many companies is to choose (for example) a modern SaaS payroll solution. The step of outsourcing is taken only after trust in the provider has grown and the solution has been maintained smoothly over the years.

Demand driven by the coronavirus

Demand for the outsourcing of payroll accounting has been increasing for years, and the coronavirus has reinforced this trend in recent months. Only a few years ago, this development would have been almost unimaginable; since then, there has been a shift in trust. There is a growing awareness that payroll processing is a service that can be bought in from external specialists. It is a repetitive administrative task that calls for more and more specialist expertise as time goes on. The assessment of a company's risks cited above has prompted many customers to examine and successfully implement outsourcing solutions. From the companies' perspective, one point is ultimately decisive: that employees are paid promptly, reliably and correctly every month.

Published: 8. June 2022

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