One of the biggest decisions any business faces is deciding what business functions to outsource and which ones to operate in-house. This can include a variety of different departments, including payroll, human resources, and other things. Even after you’ve arrived at a decision on whether to outsource or not, you’re then faced with the even bigger challenge of finding a service provider. This can prove a trying task for experienced or new business owners alike, given the plethora of options available as well as the differing services that these companies may provide.
At Payday HCM, we understand that this can be a difficult decision to make. We’ve had numerous potential and current clients approach us feeling overwhelmed with the decision-making process and the amount of options available to them. As an HCM service provider, we’re committed not only to offering the highest quality services to our clients, but we’re also committed to ensuring every business has the resources they need to make the decision that is best for their business—regardless of whether you choose our services or not.
In this article, we’ll go over the pros and cons between an HCM provider who provides their human resource information system in-house versus those who resell their software from a third-party vendor. We’ll look at the advantages and disadvantages of each of these options, diving into the intricacies of how each of these different provider platforms works. By the end of this article, you’ll have a better understanding of the options available so that you can make the best choice for your business.
In this article, you will learn:
- What Is An HRIS And How Is It Provided?
- Pros And Cons Of HRIS Resellers
- Pros And Cons Of HRIS In-House Providers
What Is An HRIS And How Is It Provided?
When comparing HCM providers, you’ll run into ones who offer an HRIS system that they’ve developed or one that they’ve partnered with another company to provide. Before we dive into their advantages and disadvantages, we’ll go over what the software is and how it is provided.
What Is An HRIS?
When looking at HCM services, the more common services include things like human resources and payroll. More often than not, these services require certain software necessary for time-tracking, benefits enrollment, PTO requests, and other related actions.
A Human Resource Information System is a way for businesses to keep track of all of their employee information as well as a host of other tasks related to human resources and payroll. This can include a database of employee personal information, a general employee database, applicant tracking and onboarding, benefits administration, and payroll.
Choosing the correct HRIS for your business can depend on a few factors. Largely, you wanna focus on the features that the HRIS provides and whether or not your business can take advantage of these features.
Acquiring An HRIS Through An HCM Provider
When looking at outsourcing your human resources services, most HCM partners will offer some sort of HRIS as a part of their services. Usually, there are two ways that an HCM provider will provide an HRIS: either an in-house developed software or a software provided through a third-party partner.
Generally, you’ll want to compare the different features offered not only through the HRISs themselves but also the differing services offered by the HCM service providers. There can also be some key differences between HCM providers that offer an in-house HRIS versus those partnered with a third-party provider.
Pros And Cons Of HRIS Resellers
When looking at HCM providers that offer a third-party HRIS, there can be a differing set of advantages and disadvantages.
The Pros Of An HCM Software Partner Provider
Software offered from established, reputable vendors typically features robust, feature-rich systems. They also can benefit from continuous updates and enhancements developed by the original software provider.
Someone partnered with a third-party provider typically leverages a proven product, reducing the risk of bugs or failures while still leaving room for customization with multiple software options. In addition to this, the HCM provider isn’t distracted by software development, allowing them to concentrate on providing high-quality customer service and support.
The Cons Of An HCM Software Partner Provider
While an HCM software partner provider may be able to provide some customization, they may still lack the ability to deeply customize the software to meet unique business needs. Any technical issues might require coordination between the HCM service bureau and the software vendor, leading to slower response times.
The reseller may also not have full control over the roadmap, updates, or features of the software, which can lead to misalignment with client needs. There’s also the matter of licensing fees paid to the software vendor, which can result in higher costs being passed on to the customer.
Pros And Cons Of HRIS In-House Providers
On the flip side, you have HCM service providers who offer their own in-house HRIS. As with those partnered with an HRIS provider, this method of service has its own pros and cons.
The Pros Of An HRIS In-House Provider
A provider who has their own in-house HRIS solution could better tailor the software to fit your specific business needs and make updates without third-party approval. A single point of contact for software and service issues could also lead to faster problem resolution.
The provider owning the software may also eliminate licensing fees, which could translate into competitive pricing. The service provider can also design the software to integrate seamlessly with other tools and services they may offer. Client feedback can be directly incorporated into future software updates and features.
The Cons Of A HRIS In-House Provider
Significant resources are required to develop, maintain, and improve proprietary software, meaning these development costs may be passed on to the client. Smaller providers also may not have the resources to match the functionality of large, established software vendors, creating an incentive for smaller HCM service bureaus to partner with software providers.
Given the amount of time and resources needed to work on the system on top of performing all of the other HCM service bureau functions, the pace of new feature development may be slower compared to dedicated software vendors. Also, without a strong IT team, proprietary software may suffer from bugs, inefficiencies, or lack of scalability.
Choosing The Right HRIS Solution For Your Business
Determining whether your business will outsource your human resource services is one of the biggest decisions you will face. Whether or not you’re just starting out or you’ve been around for years, you’ll likely face this decision possibly multiple times across your business journey. Should you choose to outsource, you’ll need to perform the proper research to ensure you make the best decision for your business. When it comes to deciding between an HCM service bureau that offers an HRIS through a third-party vendor or through their own developed HRIS solution, what’s best for you will vary. With the information provided in this article, you’ll have all the tools you need to find that best solution.
Want to ensure all your bases are covered when implementing a new HRIS? Check out our article on the common roadblocks your business may run into when implementing a new HRIS and tips on how to avoid them.
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