QUESTION 2

Canadian Solutions Services (CSS) - Managing Services

CSS competes in the payroll outsourcing industry in Canada and focuses on providing this service to small and mid size businesses. From calculating payroll and filing tax payments to administering retirement plans and workers' compensation, CSS gives its customers relief from administrative hassles so that they can focus on their core business and bottom line.

Switching from one payroll processing supplier to another is a very challenging task, and customers' reluctance to do so has allowed CSS to build a relatively sticky customer base that now includes 3,000 clients in Canada. The firm's strong brand also fuels growth and promotes customer retention since customers are hesitant to entrust their critical Human Resource (HR) functions and payroll cash to an unproven competitor. "Strong scalability has also allowed the firm to be price competitive without feeling significant margin pressure." CSS can spread the costs associated with its servicing infrastructure across its large customer base. Collectively, these factors have allowed the firm to produce margins that have been well above 30 percent during the past decade.

Offering other HR-related services to its customers is a current strategy initiative at the firm. For example, CSS has started offering recruitment of software talents to its clients. Because of the relatively small incremental costs associated with these ancillary services, a meaningful portion of this additional revenue flows to the bottom line.

Questions:

9a. Describe the core service concept and benefits that CSS provides to a small and mid-size business customer with its payroll outsourcing service. (5 points)

9b. Discuss how the selling process for a service, such as payroll outsourcing, differs from that of a product, such as a photocopying equipment. (5 points)