Administration and payroll: Essentials of shared services and outsourcing

Abstract

In this chapter business process outsourcing is defined not as a one-dimensional cost-cutting approach but rather as a complex change process that simultaneously targets efficiency potentials and ensures high service quality. The chapter shows that efficiency potentials will only be realized if – prior to implementing the outsourcing approach – all relevant parameters are correctly captured in a business case calculation. This case should not only include implementation and monthly running costs but should also at least partially foresee the cost for necessary future process and system enhancements. The chapter further illustrates cornerstones for a sustainable business process outsourcing, namely, a diligent process and requirement documentation, stringent performance measurements, and an established continuous improvement process. All of these factors ensure a successful collaboration model between the client in the respective HR department and the business process outsourcing provider. If the four areas of potential risk – system capability, system automation, skill set, and documentation – are also continuously monitored, outsourcing initiatives can lead to a better process handling and higher service quality than in an in-house environment.