In an article this week, The New York Times described a small-business community in a state of low-grade depression. Besides continuing to be challenged by the aftermath of the Great Recession, small businesses are facing a slew of new regulations that, in some cases, have even financial experts scratching their heads.
One answer for these companies might be to outsource complex business and
to a managed IT services provider. Handing over processes and functions that are not core to a business has long been a reason to outsource. However, as regulations grow ever more complex, firms that kept these processes in house may find they are at a tipping point. For in truth, small businesses – and larger ones as well – do have good reason to be concerned about the growing complexity of regulations. For them, it might be time to reach out for small business IT consulting.
Obamacare Brings Uncertainty for Small Businesses
Consider the Patient Protection and Affordable Care Act, which will begin to phase in next year. It is a complex piece of legislation, one that has even accountants and CPAs on alert. The implications are already coming into focus for IT services, but other effects are still hazy. “There is still uncertainty about how all parts of it will be implemented,” Michael Ramos, director of CPE and Training at the American Institute of CPAs wrote in a recent post on the American Institute of CPAs blog.
“In anticipation of those changes, small business owners are struggling right now to make critical decisions that will have a major impact on their bottom line and their ability to compete,” Ramos writes.
Given all this, businesses might want to outsource some or all of their human resource function, advises a new white paper released by CPEhr, a Los Angeles-based Professional Employer Organization. To be sure, CPEhr has its reasons for making this particular argument – it is a provider of such services – but it also notes that HR outsourcing is rapidly growing for several good reasons. Global Industry Analysts reports that the global HRO market could reach $162 billion by 2015, up from $103 billion in 2007 and $61 billion in 2002.
It’s Not Just Healthcare, Either
It is not just the healthcare legislation that is undergoing change. New and pending regulations are touching almost every financial function of a company – even the decision, ironically, to outsource some of these functions. Right now the Internal Revenue Service is seeking comment on a proposal that would change the liability relationship between payroll-service providers and their clients. (For a summary of the proposal, read an analysis of it that ran in Business Finance magazine.)
To add to companies’ woes, many of their financial-related IT systems are not up to the challenge — even leaving aside the issue of new regulations.
Last year, a survey from Oracle and Accenture found that the majority of companies worldwide have made substantial investments in financial reporting systems intended to improve their close, reporting and filing processes. However, the investments were made ad hoc, leaving the companies still feeling insecure about the quality of their financial data.
Seventy-one percent of finance managers surveyed say their effectiveness is limited in some way by data analysis-related issues.
That’s something to consider as another tidal wave of regulations, this time aimed at the financial community, courtesy of Dodd-Frank Act, go into effect.