Implementation costs for in-house systems up to 3X higher than Outsourcing
TORONTO, March 27, 2012 /CNW/ - ADP Canada Co., a leading provider of HR, payroll and benefits solutions revealed today the findings of a new study by PricewaterhouseCoopers (PwC) entitled Exposing the Hidden Costs of Payroll and HR Administration. According to the research, many organizations can achieve greater efficiencies and cost savings by having a service provider handle payroll and HR administration functions, rather than performing them in-house.
The study examined the Total Cost of Ownership (TCO) of four core business functions: payroll, time and attendance management, HR data administration, and health and benefits administration.
The research shows that only 37 per cent of the costs to perform business processing were accounted for by business owners, with the balance hidden within their organization.
PwC found that using a service provider to manage the business's payroll function costs just under one-third (30 per cent) less than a business that performs those functions in-house. Moreover, those that move to a service provider for multiple functions realize even better savings - up to 43 per cent less than in-house processing.
The study also revealed that initial implementation costs are three times higher when installing an in-house system when compared to using a service provider.
"The costs associated with payroll and HR administration are like an iceberg, with businesses unaware of what lurks hidden beneath the surface," says David McIninch, Vice President, Marketing, ADP Canada. "Tracking total costs, especially across functions, is difficult because related functions are often 'owned' by different departments in the organization including Finance, HR, and IT and accounted for separately."
Accordingly, many organizations make decisions about technology and sourcing that work best for an individual function, not taking into account the potential synergies and savings that could be achieved with an enterprise-wide solution.
To gain a full picture of costs associated with business processing, organizations should consider the following:
- System installation and upgrade costs;
- Processing costs (direct and indirect labour, overhead, outsourcing);and
- System maintenance fees
Once a full analysis is complete, businesses can better understand the true costs of managing their payroll and HR administration in-house.
Michael Kolm, PwC Director of the IT Outsourcing (ITO) practice in Canada, presented the findings of the study in a webinar sponsored by ADP. To review the archived webinar, please visit adp.ca.
About the survey
PwC and ADP Canada collaborated to poll 125 organizations across Canada between September and December of 2011. The resulting research study, believed to be one of the largest of its kind in Canada, was sponsored by ADP and authored by PwC, and based on the data collected from the participating organizations, ranging in size from 50 employees to more than 5,000 employees.
About ADP Canada
ADP Canada Co. is a leading provider of human resources, payroll and benefits solutions that power organizations to drive business success. ADP Canada's insightful solutions provide superior value to 45,000 clients of all sizes, allowing them to increase productivity, improve employee retention, control costs and assist with regulatory compliance. For more information about ADP Canada or to contact a local ADP Canada sales office, call us at 1 866-228-9675 or visit us at adp.ca.
Image with caption: "The tip of the iceberg: The hidden costs of HR and payroll administration (CNW Group/ADP Canada)". Image available at: http://photos.newswire.ca/images/download/20120327_C8008_PHOTO_EN_11590.jpg
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