Payroll outsourcing disasters are one of the costliest pitfalls that companies looking to gain competitive edge fall into. If you’ve managed to steer your firm through all kinds of weather, a bad outsourcing decision is probably where you are going to hit rock bottom on the performance scale. 

Most companies look at payroll outsourcing as a quick and easy way where another firm will fix its internal problems and get work done at a minimal price. This attitude, combined with sky-high expectations and near-zero correspondence results in one imagining that, perhaps, all outsourcing companies offer the same experience. 

Let’s face it - payroll outsourcing is a big decision for any company. But companies who decide to outsource their payroll feel that once having taken that big decision, their job ends there. And the vendor’s role? Understand your business strategies, draw a plan, deliver services, help with customer support, devise add-ons and also, magically read your mind? Well, tragically, this is how it is in many cases! 

All through my years in the payroll outsourcing industry, I have noticed one thing regarding outsourcing in general. Companies look out for the cheapest vendor on the block. If they find one, they give them the job. After what seems like rounds of rework and a shoddy output, companies blame the vendor for not giving them their money’s worth. An unfair expectation, I would say. 

One of the biggest reasons why payroll outsourcing fails is when companies ink unrealistic contracts with their vendors. Usually, there is no proper plan or strategy in place, lack of verbal communication between the two parties, no follow-up and an obvious scrimping on finances to wedge out the maximum you can get out of the deal. In such a scenario, the vendor, in all likelihood, will give you only the bare minimum. 

Apart from setting unrealistic goals, companies also need to hire the right kind of vendor. Choosing a payroll outsourcing firm that meets your company’s standards and work-ethic is a must. The product/service still belongs to the company irrespective of who it is outsourced to. Customers look at your product/service and determine how good it is. 

Once a contract is signed, some companies believe that the need for dialogue ends as the vendor will look into or solve all the problems that the company faces. The lack of proper management within the company and the vendor is yet another reason why payroll outsourcing fails. There’s a greater need for companies to appoint a go-to person who oversees work done by the vendor and keep the communication going at all times. 

Even before you decide to outsource your payroll, it is imperative to first settle on a trusted vendor for outsourcing your project or service. The whole objective of outsourcing your payroll is to have your eyes on your company and not to waste time on constant cross-checking with the outsourcing firm. 

By drawing up a clear and flexible contract, understanding price adjustments, having a sense of technology being used, knowing the expertise of their staff you might be in for lesser roadblocks than companies that haven’t checked these boxes. 

Payroll outsourcing is one of the best options for companies who are looking to focus on their core business. But if done without proper research and commitment, it can become disastrous, affecting business continuity and causing colossal financial loss. 

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