Payroll Outsourcing in an Acquisition Climate

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Automatic Data Processing ADP the largest provider in the nation, announced the purchase of Intuit's outsourced payroll division, the 3rd largest payroll provider in the nation. With this recent acquisition, many question the impact it will have on the industry whether or not it signifies a growing trend.

The mortgage industry buys and sells mortgages, with no regard to the client and this has the same feeling. When a business owner makes a decision to outsource a critical business function, they put a lot of time in choosing the best provider for their firm. To have that decision reversed can leave some clients bewildered

Automatic Data Processing ADP the largest provider in the nation, announced the purchase of Intuit's outsourced payroll division, the 3rd largest payroll provider in the nation. With this recent acquisition, many question the impact it will have on the industry whether or not it signifies a growing trend. The shareholder shuffle does not end there. Reuters reported on February, 23rd 2007 that Ceridian Corporation, the nation's 4th largest payroll service provider, put themselves up for sale. The article explains that there is a battle brewing internally over whether or not they should sell the corporation in pieces or as whole.

"This is the most merger and acquisition activity in our industry that I have seen in a long time," states Dean Lucente, President of AmCheck. "The mindset to acquire outsourced payroll business has long been a means to satisfy shareholders by continuing to increase revenue with little attention to retention. Customers usually become the victim of these Wall Street driven decisions"

Some of the concerns that small business owners look at, particularly in this acquisition is if the focus on customer service will be diluted. "The mortgage industry buys and sells mortgages, with no regard to the client and this has the same feeling. When a business owner makes a decision to outsource a critical business function, they put a lot of time in choosing the best provider for their firm. To have that decision reversed can leave some clients bewildered," states Kim Trowbridge of AmCheck Los Angeles.

As a member of the Independent Payroll Providers Association and the American Payroll Association, AmCheck has seen several industry shifts over the last ten years. "The payroll industry is not a commodity driven industry, particularly with the cyclical changes that a business goes through," states Lucente. "It is imperative that AmCheck, a SAS 70 II Certified privately held company, continues to make strides to attract and retain our clients through continual commitment to customer service. Meeting the changing needs of the customer, not the industry, is what we are all about."

In this climate of acquisition, there remains one constant. The reasons that a client chose a provider in the first place should remain consistent in their evaluation of the new provider. Some of the reasons people select a service provider, such as the vendor's commitment to clients, the best value, or the most diverse offering, may not be met. If the new provider does not meet those needs, then a reevaluation of the provider becomes necessary.

"What should customers affected by this acquisition do? Today's technologies have afforded emerging payroll service bureaus like AmCheck to offer everything the largest payroll service providers have and much more." states Lucente. "Moreover, we are not bogged down by the older technology that is woven throughout the framework of these large public dinosaur companies; meaning changes can be made quickly and products and services can be brought to market more rapidly."

AmCheck is a nationwide Payroll Services, Human Resource and Benefit Administration company with thousands of customers and offices in 9 major cities. For more information on AmCheck visit http://www.amcheck.com or call 888-AMCHECK.

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Sudhir Subbaiah
Amcheck
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