Running the payroll system efficiently for any business is a daunting prospect. Very few people are trusted with the responsibility of handling payroll management, which adds to the risks.  The payroll of businesses in the last decade was always overburdened with multiple tasks. Besides dealing with complex in-house salaries, the payroll department also had to take care of pension, statutory compliances, stay updated with the changing legislation, and be aware of the latest software used for the payroll system. The entire process is complicated and time-consuming. Needless to say, it is in the nature of humans to err, but even a small mistake can lead to different problems, including penalties and fines, lawsuits by employees for wrong salaries, and more. However, outsourcing the payroll has helped businesses overcome several problems. Successful companies across the globe are opting to outsource payroll functions to professionals so they can focus on their business goals. Here is a quick run-through on the problems that businesses faced in the last decade while managing in-house payroll and how outsourcing was the solution to these problems.

Problem: Improper Management of Timesheet 

The HR department of companies working with many employees faced problems in managing the timesheet, especially when they had people working for them in different locations. They also had to deal with different types of labour agreements for wages. The easiest sought solution was using an excel sheet or low-cost software to manage the data. However, this failed to provide accuracy because the HR person would be stuck manually updating the records, which spared less time for payroll processing and verification. There are several things that are included before payroll can be processed, such as leaves, unpaid leave, medical leave, overtime, and much more. 


Outsourcing of payroll enabled streamlining of all these activities because they are equipped with the knowledge of advanced document technology and customize them according to the specific requirements of the businesses.  So, instead of having to invest in the high costs of implementation and maintenance of their IT solution, they had to rent it through an outsourcing company that took care of everything – setup, maintenance, and upgrades.  The employees of the business were able to place any requests for leaves or absenteeism, and it was automatically updated in an integrated approval workflow system. The payroll/HR/supervisors received a notification so they would be able to approve/disapprove these requests. The employees and the approval officers were able to check the status of their demands.  All working hours and taxes were calculated precisely. Proper salary pay-out each month ensured team member satisfaction. This helped in enabling a healthy work environment for the employees. This enabled a consistent and clear report to be generated that was prepared in accordance with the local laws. The accuracy was100% and every element could be validated by the employee and the department heads. Also, these solutions were highly mobile as they were available online and could be accessed from any device – laptop, desktop, tablet, or mobile.

Problem: Compliance 

Statutory compliance for business owners has always been a struggle. With an overwhelming number of employee benefits, taxes, PF percentages, and similar other laws related to the payroll, it is difficult to ensure every criterion is met. Businesses soon found the mistakes snowball into penalties, fines, and audit irregularities. The changing laws only added to the already existing problem. Unless a business had dedicated and trained staff along with the latest software and technology to automate legislative changes, it was extremely difficult to uphold compliance and run the business without having to pay any penalties.


Payroll mistakes are detrimental to the business and can trigger fines wherever the company operates. Outsourcing of payroll helped the companies to reduce risk with the implementation of standardized processes across the organization. Having a good payroll provider helped them maintain best practices.  Once the companies outsourced their payroll, they didn’t have to worry about the fluctuating rules and regulations related to payroll. Professional payroll providers were obligated to stay updated with changes in tax rates and the rules and regulations for all geographic locations they are operating in. Thus, the companies could work carefree as their compliance was always met.  Providers also followed published schedules and quality assurance programs. Payroll service providers also maintained security and privacy of the company details while staying ahead with the compliance and helped in reducing the risk of fraud.

Problem: Data Security 

Businesses in the last decade always faced the problem of keeping the data safe. There are several security risks associated with in-house payroll. The business is always under the threat of embezzlement, data mishandling, safety issues of servers, and identity theft are some common problems that they faced. 


Outsourcing payroll to a reliable and experienced payroll provider helps businesses in keeping their data confidential and safe. Besides keeping several backups of data and having multiple server locations, they also used advanced technologies to store and protect the data. The providers used secure cloud-based servers and the latest encryption technology to keep the information of their clients safe. As a third-party service provider, it is their responsibility to keep the data of their customers safe and protected. With the payroll management in safe hands, the companies did not have to worry about sensitive data of the employees and the business being leaked or misused. 

Problem: Time-Consuming and Lack of Expertise

Looking after back-end tasks such as payroll management (internally)translated to missed opportunities on training, process improvement and investment. A large chunk of the business’s capital fell in maintaining the process of payroll management. Businesses would be obliged to perform these activities at the hands of employees who lacked proper training of managing payroll. 


Payroll is a kind of hindrance for business operators and owners as the in-house manager is always encumbered with related jobs and responsibilities. The biggest advantage of outsourcing payroll is that it saves a lot of time which would otherwise have been squandered in calculations, deposits, preparation of cheques, and more. Outsourcing payroll services simplified the process of business administration and lessened the burden of the employer or the department that was entrusted with the job of payroll management. It helped the employer, the concerned employees to focus on the operations, growth, and expansion plans of their business. Outsourcing of payroll also allowed the businesses to have payroll professionals work for them. These individuals specialized in the complexities of payroll processing and taxes. Payroll service providers are trained to perform payroll-related jobs. They also undergo regular training to stay updated with the knowledge of changes that consistently happen in the rules and regulations of payroll. Moreover, they provided their customers with a guarantee to provide premium services.

Problem: In-House Payroll was Costly

Handling in-house payroll was expensive. Businesses found it to be not just time-consuming, but it also required hiring skilled people who were efficient enough to handle the payroll tasks. Not to forget, the software they used required maintenance and upgrading at regular intervals. The overall cost of managing payroll, especially for the small and medium businesses, was way higher than they thought.


Outsourcing of payroll eliminated the requirement of hiring extra people just to manage the payroll. For companies that had the HR department to perform the payroll tasks were able to divert them to more important tasks and use the talent of the HR personnel to perform other jobs that were beneficial for the overall growth of the company. The businesses also did not require investing in expensive software or update them, saving a large amount of investment. They were also able to get their reports prepared precisely as the payroll providers used the best available software. Timely compliance ensured saving cost on fines and penalties too.  Modern businesses and organizations that have not outsourced their payroll continue to face similar problems. Outsourcing payroll to a trusted and professional company offers several benefits to the business, its employer, and its employees. 

Which is the Best Company to Outsource Payroll?

Paysquare aspires to be the driving force for our customers by delivering them payroll solutions that directly help grow their business. Our team comprises professional and skilled people who are trained in payroll management. We use state-of-art software and technology to prepare the data and keep it secure. PaySquare is not limited by geographical boundaries and can provide you with our services. Get in touch with us to learn more about our services.                     

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