When your company is deciding to take an outsourcing solution for payroll processes, you need to ensure that you know everything about the ROI of the payroll department. These return on investments can help you understand the benefits you are gaining from employing a payroll processing system. Hence, in the following discussion, we have explored every factor that can help you maximize the ROI of the payroll department. Dive in and start exploring how your team can improve the ROI payroll.

Maximize ROI of Payroll

While we have discuss the ROI on payroll outsourcing, how can you understand the points that improve ROI?

Here are some factors that enhance the ROI of your business.

1. Reduce Errors

One of the well-known methods to maximize the ROI of payroll is to improve efficiency. You need to think about the errors that are being made in the payroll department.

Are you correctly dispatching salaries of employees?

Are tax calculations on point?

Do you need to face the consequences of mistakes regularly?

These issues are not only impacting the way you dispatch salaries or pay taxes but also how you need to pay fines, and that is where you end up paying more than required for payroll.

So, create a payroll processing system that is error-free. You need to aim for a situation where there are no manual payroll errors.

2. Reduce Expenses

Other than managing the errors, you need to keep a check on your expenses. If your payroll department is taking too many resources or you are not able to reduce costly errors, then it may be time to rethink the entire structure.

Start from the baseline and create a payroll model with efficient tech, skilled employees, and mindful hiring. Avoid mistakes that come with penalties. Even if you mess up the pay of a contractor, they can easily add that in the next payment. But, you can’t achieve the same when you mess up the tax preparations of employees. So, work towards reducing errors that are costly.

3. Retain Trusted Employees

In your HR department, you need trusted, experienced, and skilled employees. You need to at some point start retaining your HR staff to constructively emerge your payroll ROI.

However, we understand that in a small or medium organization, this might be an issue. You can’t always offer a raise or appraisal to the employee. You need to keep a check on the budget and expenses that we talked about. But, in an attempt to do so, we hire amateurs, who are incapable of maximizing the ROI of payroll. As a result, we reach back to square one and then we try reducing errors and expenses.

A simpler solution is given below:

4. A Payroll Solution

Invest your money and time is a trusted outsourcing solution. When in-house management leads to errors and higher costs, it may be smart to swiftly change your routes. Today, we can’t wait months to observe the impact of a decision. When you know the situation clearly, act upon it, outsource payroll functions, and maximize the efficiency and ROI.

How outsourcing payroll will help you?

      • You get access to the latest technology that helps you automate calculations. Manual processing is reduced, which decreases errors in the payroll department.
      • Since you don’t need to purchase tech or hire multiple employees for payroll processes, you are reducing your expenses and maximizing the ROI of the payroll.

Estimating the ROI of Using Payroll Outsourcing

ROI on payroll outsourcing means measuring the returns received when outsourcing functions of the business. Mostly, this ROI is a result of the money that you save and the productivity that you improve. Below we have discussed these factors in detail. Check and find out how ROI on payroll outsourcing is better than in-house payroll processing.

1. Labour Cost

Your labour hours translate to actual costs. So, start by calculating the labour hours your team spends on calculating payroll, dispatching salaries, writing job descriptions, managing appraisals, and correcting errors.

Now, compare this with the pay of the payroll outsourcing partner. You will realize the amount of money you can save by hiring a payroll partner and offering them accurate data. In turn, they offer you accurate results. You don’t need to stay back in the office with your HR team on Saturday to complete payroll processing.

Calculate this metric by finding the hours spent on payroll in-house and the time saved in automating and outsourcing these tasks.

2. Increase in Productivity

With payroll outsourcing, you can easily maximize the ROI of payroll. The entire setup is such that it yields better productivity. With an in-house team, everyone is trying to reduce errors and step on the other side of mistakes.

However, payroll outsourcing is not like this. It is accurate, simpler, and quick. You get payroll on time, which means better productivity for your business.

      • Your HR team can focus on people’s management. This helps in managing, upskilling, engaging, nurturing, and training employees when required.
      • Your employees get payroll on time and their issues are resolved quickly, which leads to productivity.

You can measure these factors easily inside your office through an appropriate employee tracking system.

3. Savings Factor

If you can eliminate the HR department or reduce the size by outsourcing payroll, wouldn’t you save money?

Managing the entire department means onboarding, managing, retaining, and upskilling these employees. The costs incurred are more than the payment of your payroll outsourcing partner’s fees.

Calculate the payroll and expense of your HR department and compare it with the fees of the outsourcing partner. You will understand the difference you can make with this change.

4. Job Satisfaction

With an efficient outsourced payroll solution, such as Paysquare, your employees receive job satisfaction.

      • Queries are resolved at the earliest
      • They get employee self-service portal to get details
      • They don’t need to wait for their salaries to dispatch

Ultimately, every employee is in the company for the money. When you delay the processing of payroll, job dissatisfaction follows. With a proper payroll processing system, job satisfaction follows.

5. Unquantifiable Returns

Other than the results that we can quantify, there are unquantifiable results of payroll outsourcing. Here are some of these:

      • Peace of mind
      • Process streamlining

When you outsource payroll, you are able to return home at the end of the day without feeling guilty about not paying your employees. When you have struggled the entire month with your employees for an important project, you can stay assured that they will get their salaries. These unquantifiable benefits definitely weigh more than any other factor that we have discussed above.

Assessing ROI of Payroll Processing System

Traditionally, payroll processing is an internal process of the business, as every business needed control, accuracy, responsiveness, flexibility, and data security. But, an increase in market competition and employee expectations made in-house processing taxing. These processes take more time and money when achieved manually.

As a result, many organizations are now outsourcing payroll processes for improved availability and accuracy. In a study, it was revealed that approximately, 27% of small and medium organizations are outsourcing their payroll functions partially and 15% of businesses are fully outsourcing payroll.

Evaluate the comparison in ROI of the traditional payroll and outsourcing payroll:

1. Accuracy

The traditional system can’t offer you accuracy. There may be errors in payroll processing, salary dispatch, tax calculations, PPF deductions, bonus calculations, etc.

With outsourcing payroll solutions, you can get accuracy. There are minimal to no errors in your processing. This maximizes the ROI of payroll.

2. Delivery

In-house payroll calculations are often delayed. You or your team can often delay the payroll dispatch, which can lead to employee dissatisfaction and reduced ROI.

But, outsourced payroll services are never late. It is on time, which helps you keep your employees satisfied and happy.

3. Return on Investment

The traditional payroll system is filled with costs. You have to pay for the tech, management of employees, and pay off the errors.

But, in outsourcing payroll, there’s no such issue. Only pay for the services you use and enjoy higher ROI payroll.

4. Control

The traditional payroll system offers you full control, but it also takes away your peace of mind.

Contrary to this, payroll outsourcing also offers you control of payroll factors and you also get peace of mind. You can decide every factor related to your payroll, such as the time of dispatch, payroll bifurcation, deductions, etc.


Maximizing the ROI of payroll helps in improving the efficiency of your payroll department. This means that your employees are happy and you are spending less money on the management of this department. Generally, without a payroll processing system or outsourcing solution, you may end up increasing your expense while still receiving very little in return. However, outsourcing payroll solution maximizes your ROI, which helps in focusing your resources on core business activities. If you wish to utilize the payroll outsourcing services, then connect with Paysquare. With decades of experience, we understand the payroll landscape, which helps us help you with payroll tasks. Let’s get on a call and discuss the details of our outsourcing solution further.

You may also like

How Does Outsourcing Affect The Role Of Human Resource Professionals?

Read More

Leave Management Process in India- The Complete Guide

Read More

Payroll and HR Outsourcing for the Banking and Finance Industry

Read More