Payroll Outsourcing There are alternatives - Get to know them
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The State of Payroll Outsourcers

The playing field is changing significantly in the payroll outsourcing market.  Consolidation in the industry has created multiple strong options available to choose from.  ADP recently acquired ProBusiness (note still in SEC review) and Paychex recently acquired InterPay and Advantage Payroll Services.  We are also seeing the major HCM software vendors like PeopleSoft and SAP enter this market space by offering ASP (application service provider) services directly or through their partners.  

We have moved from a time when there were many payroll outsourcers with a few hundred to a few thousand clients to a time where the largest outsourcer, ADP, has 500,000 clients, the number two outsourcer, Ceridian, has 100,000 clients and the number 3 outsourcer, Paychex, has 50,000 clients.  Many of the remaining outsourcers are carving niches in their locality or a specific industry.

Typical Outsourcer Offerings
The landscape has changed dramatically in the last few years.  Offerings have improved, and users have more options.  A CDG & Associates client recently commented when he was originally looking at outsourcers, he would have happily selected an outsourcer that could satisfy 75% of his requirements.  Now the outsourcers provide 125% - more than he can conceive to ever want or use.  

Following is a list of some of the features most outsourcers provide.  Some of them may have an extra charge associated with them. 

	Use of the latest technology from Microsoft and Oracle taking advantage of the tools provided with the databases and the operating systems to ensure data integrity, secure the system, develop screens, create workflow and self-service.
	Robust, intuitive report writers that save reports for repetitive use, export data to your desktop tools, create graphics and offer many standard reports.
	Point in time reporting – yes, most of the outsourcers can now create a picture of your employee population as of a particular point in time.  Some can even compare that point in time to the present.
	Self-service that includes self-service for the Payroll and HR professional (power user), as well as for the manager and employee with workflow to manage the steps and approvals required.
	An expandable database that can house unlimited earnings, taxes, and deductions, as well as user-defined data.
	Pre-audit tools that allow you to run your pay data through the outsourcer pay process prior to submitting the pay data for ‘the’ pay run.

Outsourcer Differentiators
So how do the payroll outsourcers differentiate themselves?  There are three things to measure the outsourcers against once they fulfill your requirements: 

Customer service – does the outsourcer maintain the same hours of operation as your organization?  Do they provide a customer service representative that dedicates time to you?  Does the service level agreement meet your needs?  Can you escalate problems and have them addressed promptly?

Organizational fit – Does the outsourcer’s vision match your company’s need for payroll today and tomorrow?  Is the outsourcer investing in the features that will best serve your company?

Growth potential – Does the outsourcer have the ability to meet your future needs such as company growth, acquisitions/mergers/divestures?  Does the outsourcer have features and functionality that you can grow into such as cafeteria benefits, applicant tracking and self-service?

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Outsourcer Pricing
The outsourcer pricing model has remained static for basic transactions such as production of checks and W-2s.  The outsourcers still charge for monthly, quarterly and annual cycle costs, as well.  Incremental increases should occur in any of these unless your current agreement locks in costs. 

So, where is the outsourcer generating the revenue to provide all this new, fantastic functionality?  Some of it comes from the initial implementation fees, but most of it is being recouped in annual licensing of the new tools, the report writer and the self-service functionality. 

Summary
The payroll outsourcers have come a long way!  They have listened to your cries.  And as the outsourcer market shakes out, you have the opportunity for great deals.  CDG can help you make the best outsourcer selection for your business.  Please call us at 972-250-4104.