HRMS Payroll: Why Near-Shoring & Outsourcing Work

Most companies these days are becoming more global: customers are located around the world and there is an expectation that your company will need to have staff that can support them in their time zone. As well, you may have seen the rise of near-shoring and offshoring; many functions can move to remote environments to take advantage of efficient labor practices. While we haven’t seen HRMS support move to remote shores beyond programming aspects, payroll support seems to be a moveable function. How is HRMS payroll support possible in a remote environment while most other HRMS support is not?

Often, effective HRMS support requires an understanding of the HR business, and the ability to talk to internal customers, e.g. HR partners. A strong HRMS analyst will understand the work of HR and be able to suggest process improvements or system usage to create more effective processes. With payroll inside of an HRMS, however, it’s mainly about the rules and numbers! Transactional payroll processes often have little leeway for modification or interpretation as the rules are government driven. Interfaces control the entry of data into HRMS payroll as employee data changes automatically flow through without intervention. The main focus of the payroll analyst becomes the payroll processing, something that can be done anywhere in the world.

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Even in cases where a HRMS payroll analyst must take action, data elements are often numbers based: a change in a salary, working hours, etc. Data elements are limited in changes that can occur and rules must be followed. As a result, an understanding of payroll rules and numerical prowess often takes precedence over English language skills, or an ability to perform customer analysis. Of all areas of an HRMS, payroll being so rules driven is the one that is most ready to make the jump to offshore.

Two-Sides to Every Story

What are the disadvantages though, of such a proposition? A few key considerations to keep in mind:

Data privacy and data control - Payroll data often contains your most sensitive data elements, such as social security number or date of birth. Access controls and procedures must be locked down to ensure that only relevant personnel can access the data.

Staff retention - While payroll outsourcing is only in its early years, it appeals to resources in emerging markets who are able to gain skills over time. Talented staff with strong language skills and a desire to earn more money can be difficult to retain if low outsourcing costs translates to low wages longer term.