Payroll outsourcing services. What comes to mind when you first read this? Many people have positive notions because they have had good experiences. But, a lot of others negatively perceive payroll outsourcing, due to faulty mechanism and poor handling. Situations have changed today. With the number of small businesses and startup-innovation centers coming up, the complexity of businesses is also increasing. Due to this increased complexity, competition, and requirement to stay ahead of competitors, it is necessary to streamline operational activities of the business such as payroll. What would you choose – working on the payroll at the end of the month or collaborating with the client to deliver a better project? We all know the practical answer. But, payroll is important. We can’t overlook it. So, what do you do? You can utilize payroll outsourcing services. Here’s why you should choose this route. Dive in and explore more.

Drawbacks of In-House Payroll

We do not have a big list of drawbacks of in-house payroll. But, we have three factors that can impact the working of your organization to a great extent.

Here are these three factors:

1.    Too Much Investment!

The investment is just too much – both in terms of time and money.

You have spent money to hire people or the recruitment process.

You have spent money to manage these people.

You need to spend money to offer training and growth opportunities for these people.

You need to spend money to offer incentives and appreciation to these people.

Overall, the money being invested here is just too much. You can include additional costs or overheads incurred due to minor errors, employee termination, new hiring, and other such situations.

Then, you have to give it on time. The time is also too much.

You need to look after these employees.

You need to sit with these employees to understand issues as they arise.

You need to spend time in hiring these employees, take interviews, guide, etc.

All this effort and money is simply not required. You are a small business or startup, think smartly. You have a lot on your plate. So, why increase the burden? Choose a good HR payroll outsourcing company and hand over the payroll tasks.

2.    Complex Job Role

Believe or not, HR or payroll activities are complex.

There are multiple requirements and job deductions that we simply can’t analyze without a payroll expert. Further, to add to the complexity, these rules keep changing and enhancing, which means that you also need to stay updated to changing requirements.

This complexity can be reduced when you outsource. You will not have to stay updated to payroll terms and everything will be managed and re-checked by experts.

3.    More Mistakes

Being a small business owner means you have to assume separate roles every day. One day you are the manager, another day innovation center, and the next day a content creator. You need to step into different shoes to manage work and deliver quality.

In between these important client deliveries, payroll can vanish. This means that you sit on the last day of every month to dispatch salaries in one night. This also means that you can make mistakes and incur penalties. For example, for not submitting the right tax.

These mistakes can be reduced with payroll outsourcing services.


Because that is their main job. Like you would do your best to serve your client, your payroll outsourcing service provider will do his best to serve his client – you.

Payroll Outsourcing Services: What is Offered?

If we simply define payroll outsourcing services, then it is the services offered to help you pay employee salaries on time. These services allow the employer to maintain statutory compliance and tax-related compliance of the business.

However, it is necessary to note that although payroll outsourcing services remove the worry out of the picture, you still need to understand the process to execute it effectively.

Here are the things offered by a payroll outsourcing service provider:

      1. Monitoring or tracking the attendance of employees from the employee biometric tracker or other methods.
      2. Creating a database for employee-related information such as account details, personal information, leave data, health leaves data, etc.
      3. Calculations of payroll and taxes after extracting raw data and information from various sources.
      4. Proactively monitoring regulations, laws, and changing rules set by the government or similar-level authorities.
      5. Ensuring compliance by timely tax filing, return filing, etc.
      6. Offering reports related to payroll processing to help you take better decisions in the future.

One of the benefits of payroll outsourcing services that are included in the package is the ease of monitoring data. You usually get access to the employee portal, which makes it easier for your employees to track data. This makes it easier for the whole organization to stay updated with payroll activities. Further, everything else related to payroll also becomes hassle-free with reports, automatic attendance tracking, and regulation tracking.

Benefits of Payroll Outsourcing Service Provider

The drawbacks of in-house payroll that we have discussed are crucial for a small organization. Even a single payroll penalty can cost a lot of money and severe reputational damage in front of the employees. Hence, payroll outsourcing services seem like a feasible option, which is why we have explained dedicated benefits of using the same.

Here are the benefits of using a payroll outsourcing service provider:

1.    Access to Skilled Staff

Being a small organization, it may not be possible for you to hire several skilled employees. This can reduce the efficiency of money management and disrupt the financial flow of the organization.

When you utilize a payroll outsourcing service provider, it is possible to utilize the skills of the employees of the provider. You can gain access to expert guidance without actually maintaining these employees.

2.    Better Decision Making

As the workload of your payroll activities increase, the efficiency of your operation tasks or important business tasks reduce. This means that you start spending more time on the payroll tasks and keep pushing non-payroll or essential business tasks to the back seat.

As that happens, the decision making becomes poor and effectiveness reduces because you are neither able to focus on payroll nor on the business.

With HR payroll outsourcing company, you can hand over the payroll worries and focus on important decision making with a free mind.

3.    Enhanced Risk Management

You can divide your risk portfolio by allowing the payroll outsourcing service provider to complete some of the tasks. This is better than hiring an in-experienced person, training them, and increasing the risk of the organization.

The payroll outsourcing services have a team in place, they can handle it well. They can reduce system errors and improve your risk profile. The payroll outsourcing service provider can also reduce or completely eliminate non-compliance risks.

4.    Increase Efficiency

Your in-house workforce can improve their efficiency in multiple ways:

Firstly, since you are outsourcing, your workforce does not have to spend time on payroll. This is because when you do it in-house, it becomes everyone’s responsibility to check it and re-check it. With payroll outsourcing services, the checking is achieved by the provider so the workforce is free to focus on more strategic roles.

Secondly, when your payroll is dispatched on time, employees are happier. This happy workforce is bound to deliver high efficiency. Don’t you think?

5.    Flexibility in Staffing

Flexibility in staffing is achieved in two ways:

Firstly, you don’t have to hire payroll-related employees – at least not too many of them. You can hire one in-house person to coordinate with the payroll outsourcing service provider. You can use this money, which would have been spent on payroll employees, to hire more employees for other positions.

Secondly, you can easily up-scale or down-scale without worrying about the termination or hiring formalities that are to be executed for payroll.

6.    Improved Payroll Execution

Your payroll outsourcing services understand the crucial nature of their work, hence, they will definitely deliver work on time. The possibility of delay is minimum and efficiency of work is (almost always) maximum.

7.    Cost-Effective

Payroll outsourcing is cost-effective for the organization. This is because when you hire employees, you have to pay them a huge amount of money, maybe not directly but it takes money to manage employees.

But, in payroll outsourcing service, you only have to pay for the services you take.

8.    Competitive Advantage

When payroll activities go wrong, employees directly get affected. For most of the employees, when this experience is soured once, they start looking for other options or they are less likely to recommend you to a friend. This automatically reduces your market value and potential employees are less likely to work with you.

When you outsource, your payroll is top-notch and your error-resolution has quick turnaround time. This helps you maintain a competitive edge in the market.


While many companies prefer in-house payroll management, the hassle involved is just too much. Using an HR payroll outsourcing company can help you reduce the hassle and remove the worry from the situation. So, what would you choose – a solution with more advantages (outsourced payroll) or a solution with more hassle (in-house payroll)?

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