Judging by the study conducted by PriceWaterhouseCoopers (PWC) for ADP Canada, Canadian companies do not have a good view of their payroll and HR management expenses, especially due to hidden costs.
Canadian organizations tend to overlook some costs related to payroll and HR management, according to the survey conducted by PWC and ADP Canada with 125 Canadian companies. The study looked at the Total Cost of Ownership (TCO) of four basic administrative functions: pay, time and attendance management, HR data processing and administration of health and benefit plans. It revealed that hidden costs represent 63% of the TCO.
Internal or external management?
It was found that organizations operating with internal management have more of a tendency to minimize certain expenses such as the costs of indirect labour (approval of overtime by managers, distribution of paychecks by the administrative departments, etc.) and costs of maintenance. Since they depend on several departments, these costs are difficult to assess within the company.
Reduced costs
The study also underscored the advantages of outsourced HR management solutions. Use of a service provider for payroll management costs about 30% less than taking care of these functions internally. Another advantage is that organizations that opt for a single service provider for management of payroll, time and attendance spend about 43% less than those that use a manual or non-integrated process.
These results enabled PWC to forecast an increase in SaaS solutions in payroll and HR management in Canada. This development would permit catching up with the United States from a technology point of view.