Here are surprising benefits of outsource Singaporeans must know

A wise person said, “Change is inevitable, growth is intentional”.

Successful businesses profit from embracing the idea of intentional growth. In Singapore growth has come from many economic sectors: tourism, luxury goods retail and banking as examples.

Visitor arrivals to Singapore were up by 9% and 13% during the last two years, according to Yearbook of Statistics Singapore 2012. Luxury retail continues to grow across the region driven by both internal and visitor demand.

Ipsos Survey of Singapore Residents showed that purchases of luxury goods by Singapore residents alone were up 6% during the past 12 months. Global banks, private equity and hedge funds have all moved operations to Singapore.

When confronting business growth, and the operational demands stemming from it, do we increase internal headcount to meet change or do we outsource? It is not just about the cost, but your long term ability to strategically focus on your core business.

During a period of growth or change, using external experts can help leverage your existing capabilities to accomplish business mission. Outsourcing can help a company remain flexible and make change. The company can still run its core function while the outsource vendor helps to absorb the change. Service quality to both clients and employees can be improved.

Outsourcing is also a solution during the company formation stage. In 2012, Singapore saw an 8% increase in company formation. New companies face the daunting task of hiring, payroll, and arranging visas for their expatriate employees.

We were approached by a Food & Beverage (F&B) client who had recently set up a business in Singapore to handle all of their Accounting and Payroll needs. As expatriates, the owners of the business had little knowledge of how to comply with local requirements with regards to Ministry of Manpower (MOM), Central Provident Fund (CPF) and Inland Revenue Authority of Singapore (IRAS).

Like many new businesses, there were a multitude of more urgent matters that the owners needed to attend to. Payroll for F&B industry is very challenging because of the extremely high turnover. We always have to stay on top of starters and leavers, paying their final pay within 7 calendar days, and in the case of foreigners withholding final pay before tax clearance.

There are specific payroll needs of F&B industry because there are full-time and part-time staff, with different hourly rates and overtime. F&B industry also has complex accounting with incoming sales such as credit card, cash, nets payments, as well as the need of keeping stock account.

All the necessary systems were set up by going onsite to their location ensuring that when the business started operations, all paperwork and information flowed smoothly. Beyond cost reduction and time efficiency, we worked closely with our client to ensure strategic business alignment by learning their business model and making sure our services were tailored to facilitate their growth.

Human Resources functions such as visa, employment pass, payroll and certain talent management functions are often outsourced to external vendors. Most companies just don’t have the resources to do it all and do it well. And if they do, what is the cost, what strategic work is being missed?

In their book 100 Things you Need to Know: Best People Practices for Managers and HR, management experts, Eichinger, Lombardo and Ulrich are succinct in noting the best reasons for outsourcing human resource administrative functions.

Fundamentally, utilising an expert vendor (outsourcing) to provide transactional work, frees up the Human Resource team for the meaningful strategic and transformative work that is truly value added.

Five years on, as the client’s business has grown significantly and opened multiple outlets, they continue to outsource placing high value on the fact that they can focus on their core business, since we provide them with the equivalent of a full time Finance, HR and even Administration team where necessary, for a fraction of the cost.

HR issues the client would face if handling internally such as sick leave, annual leave, resignation amongst many others, back up for covering existing staff, are not something the client ever has to worry about.

In a market that is continuously changing the rules and regulations, an outsource vendor can help you navigate the changes and let you focus on your business mission with peace of mind.