In recent years, many companies have shifted to outsourcing various aspects of the business, like payroll. Outsourcing has helped companies to reduce costs and ensure compliance with the law and regulations. Payroll outsourcing is, in fact, one of the fastest-growing segments of HR outsourcing. The future of Payroll Outsourcing is promising as there is a visible trend of companies choosing to outsource their payroll management to professional service providers.

The Covid-19 effects

It has been several months since the Covid-19 pandemic gripped the whole world. The economy had to shut down completely across the globe. People have just started to settle again and opening their businesses. The main topic of conversation at the moment, and for the next few months, will revolve around the impact this sudden collapse of the global economy had on the companies and employees. The world, as we saw it before and as we are seeing it after Covid-19, is completely different. We may never go back to what it was before.

In the last few months, new operational limitations have emerged in HR and payroll. Payroll trends suggest that many companies have realized that there is an urgent need to improve the payroll system as it was not ready to deal with a pandemic situation.

Covid-19 has tested every aspect of payroll

HR and payroll have been tested several times in the last few months. Many lessons have emerged from past mistakes and companies have gained immense knowledge and collected important data about what has been missing and what can be done. The companies are now moving forward and replacing old IT systems that use manual and inefficient processes. These processes miserably failed during a pandemic.

There was a lack of visibility and analytic capacity of the payroll departments. Even the companies and software that exclusively deal with payroll were not ready for a pandemic. The coronavirus effect taught everyone to have strategic corporate planning to ensure the payroll system runs smoothly even with low manpower. Payroll Outsourcing after Pandemic has become a necessity as the entire workforce, or a large part of it, is now working from home, there is a huge challenge in a payroll system that needs consideration to ensure smooth operations in terms of people management.

What are the advantages of outsourcing payroll?

Reduce costs: One of the major benefits of hiring Outsourcing Payroll companies is that it saves costs. You do not need a dedicated team or department that manages payroll every month. Payroll service providers often cost much less than the in-house payroll management.

Improve data security and confidentiality: No matter how secure you believe your in-house system is, it is impossible to keep track of threats. On the other hand, payroll outsourcing companies keep their systems upgraded and highly secure.

Access to technologies that support remote work: You will have access to the latest technologies used in payroll management.

Improve the employee experience: It becomes easier for the employees to get access to their information like pay-slips, tax deductions, account statements, and more.

Ensure compliance: The payroll service provider makes sure that your organization complies with the latest regulations.

What is trending amid coronavirus lockdown?

Covid-19 has resulted in unprecedented changes in almost every sector. Nearly every country had to shut down entirely due to the rising number of infections that caused significant financial loss. The way businesses function has changed a lot in a short span. If something has trended majorly during a pandemic than that is work from home or WFH. Payroll trends have changed majorly due to the fact that employees are exclusively working from home and many companies are hiring dedicated teams that can operate from remote locations.

Those companies who had their Human Resources Information in the cloud were able to shift their operations to remote working quickly. Companies that were running on traditional payroll infrastructure were not prepared to take the hit. Most of the employees in such companies are working from a fixed workstation. In such companies, payroll systems are installed and hosted on the local data centers, making it next to impossible to run and manage payroll remotely.

Benefits of outsourced payroll situation like a pandemic

It frees uptime

Outsourcing helps in freeing up time. In most cases, the administration spends anywhere between 50 to 200 hours annually on payroll management. Many companies have dedicated departments to manage HR and payroll. For an average small business, spending that much time every year on the payroll is not wise. During a pandemic, the situation got worse for the companies that are still using the manual or in-house payroll system as their database was locked in the office. This is where outsourcing comes in handy. The future of Payroll Outsourcing is in its ability to save crucial time for the organizations. It also helps reduce stress on the administration and you will be able to concentrate on your business.

In sync with the compliance

For any corporation, big or small, compliance with the regulations, including central, state and local tax rules, wage rules and other regulations, is important. These regulations often change depending on market demands and requirements. Keeping up with these regulations is a tedious task. Even if you have a dedicated department in your company, it is not possible to keep up with the changing regulations. During situations like a pandemic, governments changed several regulations which are not easy to understand.

Outsourcing Payroll lets you focus on the business as it takes care of the quickly changing regulations on the central, state and local levels. Payroll service providers mostly have dedicated teams that understand different sectors and keep their processes in sync with the latest regulations to ensure compliance. It is their job to issue payroll accurately and on-time no matter the situation the world is facing.

Satisfied employees

One of the major issues during a pandemic is the managing payrolls for the contract based employees. Also, counting hours for the employees working from home is not an easy task. Many employees ended up doing additional hours worth work without even knowing or getting paid for it. Such incidents are not good for the morale of the employees.

Payroll Outsourcing Services, especially during the pandemic, ensures that such incidents do not happen. As payroll management is already in the cloud, it becomes easier for the payroll service providers to manage hour-based calculations for the payroll. It helps in keeping the employees satisfied and stress-free. During times like pandemic, payroll issued on time is a major booster for the employees.

Managing taxes

In-house payroll and HR management during pandemic time have made it difficult to manage taxes and keep up with the changed tax regulations. Several changes in the payment collection and payroll management at every level have made it almost impossible for the corporation to run the accounts smoothly.

Payroll Outsourcing after Pandemic is helping in keeping track of the taxes that the company has to pay on behalf of the employees. As many tax exemptions were provided to small scale businesses in the last few months, these service providers can help manage taxations based on a specific sector and company size.

How payroll outsourcing supported during a pandemic?

There are several ways payroll outsourcing supported companies during the pandemic.

Quick payroll management

Let’s settle down on the fact that manual payroll management is a time-consuming job and there is always a chance of manual error. Even if you have a dedicated department, it will be impossible to keep up with the regulations. Those who outsourced the payroll, especially during a pandemic, saved a lot of time and energy to save the business from the additional problems pandemic has brought.


Pandemic has opened countless doors for hackers. There has been a significant spike in data theft and malware attacks in the past few months since the pandemic started. In-house payroll management needs remote access to the servers that increase the chances of a data breach. Outsourcing payroll helped tremendously in ensuring the security of the data. As the servers at the service provider’s location are highly secure, it became almost impossible for the hackers to breach in.

Payroll tax compliance

During the pandemic, governments on central, state, and local levels changed taxes for the corporations to help them cope with the losses. Many deadlines were moved to ensure that the companies have ample time to manage the businesses and find ways to function smoothly. However, it became almost impossible for companies to track these changes. Outsourcing payroll helped the companies manage every aspect of the tax system and ensure compliance with the changed structure.


The payroll system managed by service providers is highly customizable. That means the companies do not have to worry about changing laws and regulations. These service providers took care of everything and customized the payroll system based on the size of the corporation, sector, and other factors.

What issues will arise in payroll?

There are several challenges that the companies faced during the changing work environment. Every sector has faced major changes during the Covid-19 outbreak. There is no question that everyone out there is under extra stress related to work.

It has become harder to engage with the teams and productivity has been hit massively in many sectors. It has become hard to manage teams as most of the employees are working from home and adapting to the latest technology is not everyone’s cup of tea.

The Payroll trends suggest that there has been a lot of change in terms of pay and regulations. In fact, in many sectors, rules change almost every week, and it has become harder to keep up with them. The time is even more difficult for organizations operating from multiple locations as they have to comply with changing regulations on every location.

Monitoring and responding to the legislations of every location that, too, during pandemic has become so difficult that many companies have decided to shut down the operations. Though the resources are available to manage these changes, many organizations just could not take the hit.

Outsourcing is the key to better payroll management

In recent times especially after the Covid-19 outbreak, it has become evident that the companies have to take drastic steps to ensure they are ready for a pandemic like situations. To survive in the changing world, it is important to save as much time as possible and concentrate on improving the business's logistics. The future of Payroll Outsourcing is bright as with the help of payroll service providers, organizations can save crucial time and ensure compliance with the latest regulations imposed by governments. To know more about Payroll Outsourcing companies in India, you can contact us.

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