ROSELAND, N.J., Feb. 1, 2011 /PRNewswire/ -- ADP®, a
leading provider of HR, payroll and benefits administration
services, today announced the findings of a new study by PwC
entitled "The Hidden Reality of Payroll & HR Administration
Costs." According to the study's findings, many organizations
can achieve greater efficiencies and cost savings by outsourcing
payroll and HR administration functions, rather than performing
them in-house. Specifically:
- Organizations managing payroll, workforce administration, time
& attendance, and health & welfare benefits in-house using
premise-based or hosted software solutions spend 18 percent more,
on average, administering these functions than organizations that
outsource to ADP.
- Large organizations actually spend 27 percent more to manage
payroll, workforce administration, time & attendance, and
health & welfare benefits in-house than similar-sized
organizations that outsource to ADP.
- Organizations using multiple software vendors to administer
payroll, workforce administration and time & attendance
functions in-house spend 32 percent more, on average, than
organizations that outsource to ADP.
Based on data collected from 279 participating large (those with
more than 1,000 employees) and mid-sized (100 to 1,000 employees)
organizations, the study breaks down the different cost drivers of
payroll and HR administration, and details the strategies that are
enabling some organizations to administer business-critical
functions such as payroll, workforce administration, time &
attendance, and health & welfare benefits in more
cost-effective ways.
Key among the study's findings is that, on average, in-house
administration of payroll, workforce administration, time &
attendance, and health & welfare benefits typically requires
more than $1,400 per employee per
year (PEPY) for large organizations and nearly $2,000 PEPY for mid-sized organizations. In
addition, it found that many 'hidden costs' that organizations
frequently overlook account for more than 50 percent of the total
cost of ownership of administering these functions in-house.
"While most companies consider costs such as a payroll
department's staff, or the acquisition costs of a new ERP solution,
many fail to recognize certain hidden costs necessary for operating
and integrating these interdependent processes," said Carlos Rodriguez, president of ADP National
Account Services and Employer Services International.
"Organizations often apply separate technology and process
solutions to individual administration functions without
considering how those solutions work with each other, which serves
to drive costs up due to task overlap and other inefficiencies.
Clearly, there is a better way."
The study also reveals that despite technological advances,
payroll administration costs have actually increased rather than
decreased since 2003, as organizations have focused on technology
innovation rather than overall process transformation.
The study concludes that cost effectiveness stems from
comprehensive process transformation and not just technology
innovations. The researchers explain that significant
financial benefits may await organizations ready to embrace and
implement change.
Interested individuals can download a complimentary copy of
"The Hidden Reality of Payroll & HR Administration
Costs" study at www.adp.com/tco2011.
Live Webinar
Scott Pollak, a director in PwC's
human capital benchmarking division Saratoga™, will present the
findings of the study at a live webinar on February 1, 2011 at 1:00
p.m. EST. The event is sponsored by ADP. For
more information and to register, please visit
www.adp.com/tco2011.
Study Methodology
The Hidden Reality of Payroll & HR Administration
Costs is a primary research study sponsored by ADP, but
conducted and prepared by PwC. The study is based on data
collected from 279 participating organizations, ranging in size
from 100 employees to more than 100,000 employees. All
participating organizations are U.S.-based companies or
subsidiaries or business units of non-U.S. companies, and come from
more than 17 industries, with the most prevalent industries being
manufacturing (15%), healthcare (13%), and finance, insurance and
real estate (10%). Federal and state governments were not
specifically addressed in the study.
Senior financial and HR executives (i.e., CFOs, VPs of HR, VPs
of Finance, Directors of Payroll and Controllers) were invited to
participate, and in cases where an organization had multiple
respondents provide input, a single consistent response was
created. Many organizations also participated in phone
interviews conducted by a PwC representative. In total, PwC
performed more than 500 phone and email follow-ups to clarify
completed participant data. This approach enabled respondents
to provide total costs, rather than just labor or system costs.
PwC conducted the study primarily through use of a confidential
web-based questionnaire with over 100 in-depth questions
administered from May to August of 2010. This study marks the
fourth installment in a series during which PwC has surveyed more
than 600 organizations. Previous studies occurred in 2003,
2004, and 2006.
About ADP
Automatic Data Processing, Inc. (Nasdaq: ADP), with nearly
$9 billion in revenues and about
550,000 clients, is one of the world's largest providers of
business outsourcing solutions. Leveraging over 60 years of
experience, ADP offers a wide range of HR, payroll, tax and
benefits administration solutions from a single source. ADP's
easy-to-use solutions for employers provide superior value to
companies of all types and sizes. ADP is also a leading
provider of integrated computing solutions to auto, truck,
motorcycle, marine and recreational vehicle dealers throughout the
world. For more information about ADP or to contact a local
ADP sales office, reach us at 1.800.225.5237 or visit the company's
website at www.ADP.com.
For more information,
contact:
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Jim Larkin
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ADP
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(973) 407-9714
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Jim_Larkin@adp.com
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SOURCE ADP