Supplying outsourced payroll services to Africa could generate millions in revenue for local companies, but not until bandwidth and technical challenges are ironed out, says Margi Visser, divisional manager of Q Data Dynamique Professional Services at Business Connexion.
Due to legacy processes and logistical complications, payroll software remains one of the most resource-intensive software to run on any company`s infrastructure. As a result, many companies have considered outsourcing their payrolls to bureaus.
However, this does not immediately address the problem, as bureaus are hampered by software processes that do not allow interactive access during the process.
"Legacy payrolls that still run in batch, process the payroll runs very efficiently, but the data is not available to companies during the payroll month, only after the payroll run. We need technology that is more effective; people are still running payrolls in the same way," comments Visser.
Payrolls are technically very intense, dealing with a number of variables including ghost employees and compliance requirements among others. Upgrades can be costly and companies require skilled resources to manage the system.
Moreover, payslips and pay-overs are complicated, requiring companies to vector in deductions. Leave calculations also vary from company to company and these all have to be tailored for each, making for costly, labour-intensive administration and consultation.
"The trend overseas has been a move toward outsourcing and Web-based interfaces; however, these do not fully address the technical issues at hand. Web access has led to a loss of efficiency and in bigger companies traffic is still a problem. Process speed is a big issue, current payroll systems are not delivering enough," says Visser.
South Africa stands to gain enormously from outsourcing multinational payrolls throughout Africa, but Visser points out that until these technical issues have been addressed and automated, the margins will remain low.
"Payrolls must be Web-enabled so management can access data at any stage during a payroll run. Making as much as possible of the reporting electronic will also drop costs. We must bear in mind that the additional logistics of dealing with currency and tax anomalies in each country will also place a large burden on the processing bureau."
"The biggest challenge facing South African companies wishing to tap into the African payroll pie is still the prohibitive cost of bandwidth. Until bandwidth is cheaper, Web-enabling payroll remains expensive and local companies will not achieve the margins they could were it cheaper," Visser concludes.
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