The pharmaceutical industry is constantly under immense scrutiny from the public. And it is definitely not surprising. After all, this industry is expected to be the forerunners when it comes to innovations within the healthcare and medical space.
Yet, like other industries, the pharmaceutical industry is also susceptible to high inflation, talent shortages, and rising capital costs. According to a recent PwC report, 90% of surveyed executives highlighted that they were worried about the macroeconomic environment, with many already taking action to adjust strategic plans. One core function that executives absolutely cannot neglect is payroll. Aside from the extensive amount of time spent on research and development, patents and manufacturing, payroll management requires a considerable amount of time and resources. Here are some reasons why pharmaceutical organizations are likely to benefit significantly from outsourcing payroll.
- Cost Savings
Given that pharmaceutical organizations often manage multiple other budgets and costs, other day-to-day core functions such as payroll is often overlooked. This also means that payroll systems and software are usually outdated. This creates opportunities for costly payroll mistakes, periodic software upgrading or even software technical rectifications – all of which are likely to add up.
Outsourcing to an external payroll provider eliminates the need for an in-house payroll team. Payroll software updates and maintenance are often the external payroll provider’s responsibility, which means that costs are usually bundled towards the licensing fee instead of organizations having to factor it in as out-of-pocket expenses. Pharmaceutical organizations can reallocate these cost savings towards other critical functions such as research and development or marketing.
- Increased efficiency
Processing employees’ payroll requires numerous calculations, tax filings and withholding, as well as statutory deductions. And all these occur on a monthly basis, including ad-hoc payroll runs for new joiners or resignees. The larger the workforce headcount, the higher the possibility of payroll calculation errors due to the sheer number of payroll calculations and details to be aware of.
With payroll outsourcing, pharmaceutical organizations can leave the heavy-lifting task to payroll experts who specialize in managing complex payroll tasks. This may also include handling administrative payroll calculations such as overtime, shift allowances, leave administrative as well as benefits. Monthly and ad-hoc payroll runs can also be managed by these payroll experts, streamlining the overall payroll management processes. With a streamlined and efficient payroll process, employees can benefit from accurate and timely salary payments.
- Compliance with payroll regulations
One of the major concerns when it comes to managing payroll is compliance with local country payroll regulations. After all, the pharmaceutical industry operates within a highly regulated environment, and non-compliance with payroll regulations can lead to severe consequences. With the ever-changing payroll regulations, it is common for the payroll team to struggle to keep up with the latest employment law or statutory requirements.
This is where outsourced payroll providers can help pharmaceutical organizations maintain compliance with the latest labor laws, tax regulations and payroll requirements. Most of these payroll experts specialize in staying abreast with any ongoing changes within the country or industry, minimizing the risk of penalties or non-compliance with labor and employment laws. Increasingly, there are a number of outsourced payroll providers that specialize in managing global payroll, which can be highly beneficial for pharmaceutical organizations, who often hire a team of global talents particularly for their critical functions. By entrusting payroll to experts who understand the nuances of compliance, pharmaceutical organizations can focus on their critical operations without worrying about non-compliance and regulatory issues.
- Enhanced data security
Data security within the pharmaceutical industry is paramount given the sensitive nature of patient and employee details. The same concern applies when it comes to payroll, where pharmaceutical organizations need to ensure robust data security procedures and protocols in order to maintain employee and payroll confidentiality.
Leveraging an external payroll provider allows pharmaceutical organizations to tap on their data security procedures and measures. Most outsourced payroll providers employ advanced encryption technologies, highly secure data servers and strict access controls to safeguard payroll data from unauthorized access, breaches, or data losses. These measures also alleviate the burden on pharmaceutical organizations to invest in expensive security infrastructure. However, it is also worth bearing in mind that pharmaceutical organizations should still implement some data protection and encryption measures in place to ensure the first layer of defense when it comes to managing sensitive employee and payroll data.
Given the critical and urgent nature of the pharmaceutical industry, processing payroll is no doubt an additional hectic task. By outsourcing this administrative yet important internal function to payroll professionals, pharmaceutical organizations can direct their resources towards other key HR imperatives, including upskilling employees, building future-ready competencies, and attracting and retaining key talents. At the same time, they can also enjoy increased efficiency and accuracy when it comes to payroll processing and maintain compliance with statutory payroll regulations and tax requirements.