Hong Kong companies are increasingly turning over their day-to-day functions to people who specialise in specific areas to allow them to focus their energy and resources on developing their business.

This shift has also prompted more service providers to set up in the territory, including one of the world's largest providers of payroll services, Automatic Data Processing Ltd (ADP).

"The concept of outsourcing and specifically outsourcing of back-office functions such as the payroll is an emerging trend in Hong Kong," Graham O'Donnell, managing director for ADP's Asia Pacific operations said.

Worldwide, business process outsourcing (BPO) is a rising trend. According to a survey done by PricewaterhouseCoopers, 73 per cent of companies in Canada outsource some form of their business, followed by 72 per cent of companies in Australia and the USA. The survey also found that nearly 80 per cent of executives believe that the importance of BPO as a true management tool is growing.

But some companies still consider outsourcing results in less control of a business function or raises concerns about security of information, both of which at the end of the day boil down to trust.

"We work very closely with our clients to build the trust to become the 'business behind their business,' administering the non-core function of payroll on their behalf," he said. "This frees up their valuable resources to work on other more strategically important things ... but they still retain the control on the payroll function."

ADP also assists and educates businesses on how choosing the right outsourcing vendor, and the importance of ensuring development of appropriate and effective service level agreements.

ADP entered the Hong Kong market in 1999 as a result of an existing Australian client relationship with a multi-national company whose parent was located in Hong Kong. ADP won the payroll business with the parent company in 1999 which required it to recruit and place staff in Hong Kong.

Over the past 18 months, the company has made significant investments in developing a true regional payroll solution for the Asia Pacific, which will drive forward its expansion and growth in the Asia-Pacific region over the next couple of years, he added.

ADP differs from other professional business service providers in that its core business focus is payroll services, Mr O'Donnell said. "For many other organisations, payroll and HR services are only one component of many services they provide and not necessarily their core focus."

With over 450,000 clients worldwide, ADP has developed specialist skills and expertise in the payroll industry. This allows it to provide support to its multinational clients on a regional or global basis. For example, its regional solutions enables an organisation to manage the payroll in as many as 12 countries across the Asia-Pacific region through one system and contact.

"A single payroll solution with a single point of contact is very difficult to find," he said.

Despite the economic gloom in Hong Kong Mr O'Donnell said he considers the territory maintains many advantages, including its stable political system, low tax rate, simplistic tax system, ease of entry to the China market and skilled labour force.

"It is these factors that have seen many multinational companies open their offices here," he said.

And when they do, he said ADP will be ready to offer its regional solutions and expand its presence in Hong Kong, which he expects will become an important hub for the company.

He also believes the Mainland market offers great potential. Despite the complexities of providing payroll services in China, ADP's Asia-Pacific regional solution is able to meet the requirements of its multinational clients in China.

Entering the China market would require ADP teaming up with Mainland firms, but over the long term Mr O'Donnell said this strategy might be revised.