Amid the ongoing slump in the financial service industry, payroll outsourcing has emerged as a better bet for Indian IT firms looking to provide the entire gamut of HR solutions to the US and European clients.
Companies like Infosys, TCS and Caliber Point are relying on pay roll outsourcing to achieve faster growth. No wonder, payroll outsourcing has tipped its subset human resource outsourcing in terms of growth.
A recent study shows that while payroll outsourcing registered a growth of 50 per cent, HR outsourcing grew only at 12 per cent.
“We have started to see payroll services getting more interest from larger and organized suppliers,” Gaurav Gupta, principal and country head of Everest Group.
Payroll outsourcing market pegged at $250 million is much smaller compared to HR outsourcing market at $1.3 billion.
But a large part of HR outsourcing requires onshore or near shore presence for understanding tax and regulatory issues, negating the cost advantage.
In contrast, payroll outsourcing provides immediate and quick cost reduction. It also provides simplification and standardization of the payroll process with quicker access to information.
Out of 104 multi-country, HRO deals signed as of December 2008 only 30 deals included Asia Pacific, but out of 78 multi country payroll deals, 58 were signed in the Asia-Pacific region. Realizing the opportunity Indian players are now getting aggressive to acquire more deals.
“Infosys has partnered with a niche player for providing these payroll solutions in many different geographies and that is the trend going forward,” Gupta said.
The US recession has proved that dependence on just one vertical, BFSI, which accounts for 50 per cent of the outsourcing market can be risky.
So, payroll outsourcing is now emerging as the new opportunity for Indian BPO/ITO companies to leverage on.
Source: http://profit.ndtv.com/2009/05/24212809/IT-firms-find-payroll-outsourc.html
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