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HR outsourcing reduces costs?

Delivering a high level of performance from employees during economic crisis represents a business objective almost impossible to achieve considering the large pressure on the human resource management component.  Is the outsourcing solution the lever of control needed to support this goal?

Amid an increased financial pressure, it seems that HR’s strategic role to be played along with the company’s top management has been slightly removed and redirected toward the basic administrative area (payroll, personnel administration and recruitment). Imposing restrictions on management budgets assumes taking risks such as undermining most of the measures taken in recent years to increase the investment in human resources (in particular for junior staff and, more recently, middle management).
However, the main risk that top management might face is getting used to “it works like that too” concept. Returning to the previous situation or planning development to a higher level (e.g.: the assumption of employee development processes supported by default professional management solutions) are strongly discouraged by the extension of the period needed for developing resources and infrastructure to expand their practice throughout the company. The excessive focus on cost reduction, without identifying additional income methods is rarely the solution to overcome such difficult periods.
Low cost does not necessarily imply efficiency, plans that appear to be successful on paper become difficult to implement without the involvement and ownership of collateral damage. Following the establishment of this managerial perspective, the possibility to face phenomena that cannot be easily countered may arise especially in financial and behavioral terms:
  • Lack of confidence in the organization’s ability to recover without promoting initiatives with immediate applicability and practical results;
  • Lack of trust, fear and reluctance to assume responsibility;
  • Demotivation and loss of employees who bring value by their spirit of initiative;
  • Decreased overall competitiveness of both the company and employees in particular;
  • Minimization of HRM’s strategic role through top management interventions.


One of the solutions widely accepted for the basic needs of a human resources department is represented by the payroll and personnel administration outsourcing.
Managers are beginning to realize that the effectiveness of the HR department on issues of salary outsourcing occurs only through internal allocation of large budgets that do not justify the overall effort. The time spent on monitoring legislative news, staff training costs and frequently internal system updates that would enable the latest calculation algorithm are costs assumed by few companies, especially during the economic crisis.
The adoption of salary outsourcing practices is not a sign of weakness, but rather is recognition of the performance thresholds that can be achieved by adopting modern management practices, fully adapted to the turbulent business environment constraints generated by the economic crisis.
In addition, by relieving the payroll calculation and personnel administration activities, companies can focus their resources on developing the strategic role of the HR department that contributes to the accomplishment of the long-term vision included in the management plan, an almost unknown concept to the Romanian companies that are wasting resources in areas that are priorities for their businesses.
  • Improvement of the operational efficiency
An automation and standardization system for the payroll activity provides companies with a cost reduction of up to 30% compared with the situation in which this process is deployed internally and a computing time reduced by 40%. The extra time and budget can be easily directed to other priority areas of the organization that can benefit significantly due to additional resource allocations.
  • Transparent costs
Companies can easily track the costs related to the outsourced activities due to the fact that most Romanian payroll outsourcing companies are using monitoring solutions for the time allocated to activities taking place at each account level. Times are recorded in real time and weekly reports can be presented to the company’s management, helping thus to oversee the effectiveness of the outsourcing services.
  • Legislative changes monitoring and their integration in the payroll calculation
The premium outsourcing solutions available on the Romanian market ensure legislative application updates within 48 hours from their listing in the Official Gazette. These updates are performed by teams of consultants specializing in employment law and advising clients on the implementation of legislative changes and prevent conflicts that can cause calculation errors.
  • Fairness in submitting the necessary documents to the State
The submissions are made automatically and in time by the outsourcing company, according to the legislation in force. All risks are assumed through the contract that regulates the relationship between parties and stipulates, most times the full responsibility of the company that provides outsourcing services.
  • Reliability and continuity in service delivery
The services provided often have a continuous character (99% uptime service): the payroll calculation activities are not affected by absences, holidays or technical problems the provider might encounter. In addition, the staff trainings designed to keep employees connected to the latest developments in the labor market and the acquisition and maintenance costs of hardware and software infrastructure are eliminated. Compared with the acquisition of complex payroll calculation and personnel administration solutions, payroll outsourcing services equivalent to 20 years can be purchased.
  • Fast Go-Live
Within 24 hours following the application for outsourcing services, complex payroll calculation for the entire personnel of the company can be performed.


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