BUSINESS ARTICLE

What to know about outsourcing payroll services: cost and benefits

What to know about outsourcing payroll services_ cost and benefits

What to know about outsourcing payroll services: cost and benefits

boardroomsuperadmin Business Insights, Payroll

As with many core business functions, the payroll landscape in Malaysia is undergoing rapid change. Amid technological advancement, evolving regulations and a robust employment environment, many businesses are now working with specialist third-party providers for support in bringing their payroll practices up to modern standards.

Outsourcing payroll has proven to be an effective solution that not doing so may cost you your competitive edge. From enhancing your decision-making through data to strengthening your future planning and economic resilience, it offers a variety of advantages that can help you stay ahead of the curve.

Read on as Ken Wong, BoardRoom’s Managing Director for Payroll, Asia, explores the key ways that quality outsourced payroll services can help your business succeed in Malaysia and beyond.

Engaging a payroll agency or provider can help ensure compliance

Payroll regulations in Malaysia are intricate and ever-evolving. Maintaining compliance can be complicated and time-consuming, especially if you’re unfamiliar with the local legislation or have limited resources to work with.

According to Ken, recent changes to local regulations – geared towards ensuring the fair and equitable treatment of employees – have accelerated the shift towards outsourcing.

“As of 1 January 2023, an amendment was made to the Employment Act, which has been in place for about half a century,” he says. “The changes introduced were quite significant in terms of what companies need to do to stay compliant.”

Key changes introduced in the Employment (Amendment) Act 2022:

  • The Act now covers all employees, regardless of how much they are paid.
  • The maximum weekly hours an employee can work has reduced from 48 to 45.
  • There has been an increase in maternity leave from 60 to 90 days in accordance with international standards.
  • There has been an increase in paternity leave from 5 to 7 days.
  • Women cannot be fired due to pregnancy or sickness resulting from pregnancy.

Bringing your payroll processing in line with legislative changes like these can be difficult, particularly if you’re new to the region. A payroll agency with strong local regulatory expertise can help you determine which of your employees will be impacted by new rules and how they will be affected. As a result, you can have confidence your payroll calculations are correct.

Inaccurate payroll calculations are not worth the risk, as they can lead to compliance issues that incur significant financial penalties, damage your corporate reputation and erode employee trust.

Ensure long-term business continuity

In Malaysia’s competitive employment landscape, where retaining employees is a common challenge, specialist payroll providers can help with ensuring business continuity and safeguarding your long-term success.

A major risk of managing payroll in-house is that key personnel can resign at any time, taking their skills and knowledge with them. Key personnel going on long, sick or maternity leave may also have a significant impact on payroll operations. Quickly finding and training a capable replacement may be tricky and expensive, leading to payroll issues that impact all employees. Payroll outsourcing removes this risk, as your provider will have the resources to ensure your payroll is consistently managed to a high standard, even when unexpected disruptions come your way.

Outsourcing payroll can also facilitate greater flexibility as your business grows or changes. Whether you are undergoing rapid expansion, entering a new geography, or faced with the need to trim headcount, outsourcing your payroll not only allows you to effectively manage costs but also ensures compliance whilst fostering a positive employee experience.

Additionally, it can help save on costs, allowing you to redirect funds that would have been spent on wages and training into activities that drive revenue growth.

Ensure long-term business continuity

Enhance efficiency through process improvement

Another way payroll outsourcing can help future-proof your business and fuel its growth is by optimising internal processes.

“If you have been conducting payroll in-house, you likely won’t have the systems that can help you manage data across different platforms nor the resources to streamline your processes,” Ken says. “When you engage a provider, they can implement the systems, so you can spend less time on manual tasks like data entry.”

Compensation packages in the APAC region are evolving to accommodate diverse talent needs, global market competitiveness, and intricate regulatory landscapes, resulting in their increasing complexity. Examples of these include performance-based bonuses tied to both individual and company metrics, stock options vesting over several years, housing allowances, education allowances for dependents, retirement fund contributions and profit-sharing plans. As such, ensuring staff are paid accurately and on time is now often a tedious task that places unnecessary strain on resources. By improving the efficiency of your payroll function, payroll providers can help alleviate administrative burdens on staff, giving them more time to focus on higher-value strategic work, such as growing the company and enhancing its internal culture.

Enhance efficiency through process improvement

The possibilities of payroll data

Payroll systems house a wealth of data that often goes underutilised. Professional payroll providers can help put systems in place to collate and distribute this data in real time, opening up possibilities for informed decision-making at a management level.

Retrospective analysis of payroll data can provide a range of useful insights, such as employee compensation patterns and budget allocation trends. Business executives can leverage this information to make informed decisions and fine-tune strategies for enhanced efficiency.

Payroll data can also be used for predictive analytics – a forward-looking approach that uses historical data to anticipate future needs – empowering you to mitigate risks and maximise opportunities in the workforce management space.

“From a budget standpoint, payroll data analysis can assist with predicting your peaks and troughs so that you can plan for them,” Ken explains. “For example, the data might show that you experience high attrition at the end or start of the year. You can use this information to help with your future planning.”

Proactive, data-driven planning helps with avoiding workforce issues that may hinder your business growth (eg. staffing gaps), while also enhancing the agility of your business so that it is more capable of adapting swiftly to ever-changing market dynamics.

Award-winning payroll services

Award-winning payroll services

Payroll outsourcing can have valuable benefits for businesses of all sizes.

A reputable, qualified firm that embraces technological innovation can assist with:

    Implementing a smooth payroll process
    Ensuring strict compliance with local rules and regulations
    Fostering a positive employer–employee relationship
    Responding to immediate or forecasted problems
    Accessing accurate, up-to-date payroll data
    Reducing the administrative load on key staff

    BoardRoom is a leading provider of reliable payroll services in 19 countries and regions in the Asia-Pacific.

    Powered by Ignite, our all-in-one cloud-based payroll and HRMS software, we offer a wealth of multi-country payroll expertise, making us the ideal partner for your expansion into the dynamic Asia Pacific region. Our dedication to compliance, commitment to customer-centric service and powerful human resources management system mean you can depend on us for outstanding payroll guidance and support.

    In 2022, our team was named Best Payroll Outsourcing Partner (Bronze) at the Malaysia HR Vendor of the Year Awards. BoardRoom has also achieved the International Standard on Assurance Engagements (ISAE) 3402 Type 1 attestation, an internationally recognised standard for auditing the internal control system of outsourcing service providers. These industry recognitions and our extensive experience and portfolio of success stories speak volumes of our proficiency in navigating the intricate payroll landscape in Malaysia and the Asia-Pacific region.

    If your company operates internationally, our globally-minded teams have the skills and knowledge to ensure the smooth running of complex cross-border payroll activities. We also provide complementary corporate services alongside payroll for comprehensive, seamless support across business functions.

    Contact us today to learn how our tailored payroll services can add value to your business.

    Contact BoardRoom for more information:

    Ken Wong

    Ken Wong

    Managing Director for Payroll for Asia

    E: [email protected]

    T: +60 3 7890 4800

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