A company or a business can perform optimally only when there is the appropriate division of labor. There is a distinct classification of duties between the different departments that on a ground-level communicate with each other to keep the machine (that is, the business) well-oiled and running. One of the biggest responsibilities that befall a business is making sure that the employees are paid on time and are satisfied. While it may sound like an elementary task, it actually is quite tedious and requires a lot of time and effort, which, if dedicated by the company, could result in the loss of valuable time. One cannot overlook timely payment of employee remuneration and salary because that is essential for the smooth functioning of the entire company. It is an absolute priority. That is why companies generally outsource payroll processing services so that they can save up on time and dedicated that time elsewhere (towards something that could help the company grow) by hiring people to do the same.

The most crucial components of Payroll Outsourcing Services – Know what POS comprise of!

Much like any other services, Payroll Outsourcing Services or POS also comprises of a few key elements that provide the basic structure for efficiently carrying out the payroll services in India. These are as follows:

1. Gross Salary

Also popularly called CTC or Cost to Company, Gross Salary is basically the remuneration that the employees get before any reductions (ESI, PF, PT, and other such employee benefits) each month.

2. Net Salary

As you have already figured out, Net Salary is the actual salary that the employees get each month after all the reductions for the benefits like transport allowance, special allowance, PT, PF, LTA, etc. been made.

3. Ad-hoc pay

This comprises all the occasional or one-time pays that employees get. This category includes all payments like bonuses, leave encashment, incentives, advances, etc. Sometimes, when the pay is on request per basis, it is included in the Ad-hoc pay department.

4. Benefits

Benefits are basically all the amenities or conveniences that an employee can enjoy apart from the net salary that they get paid by the company. This includes medical insurance, retirement plans, family insurance, PF, gratuity, PT, and much more. Basically, all the long-term coverage plans fall under this sub-heading.

These are the 4 most crucial and indispensable components of Payroll Outsourcing Services that everyone needs to be aware of.

Why would a company outsource payroll for the new financial year?

A new financial year comes with a lot of new added responsibilities and new targets. With so much to attend to, the last thing the company needs to worry about is payroll services. That is why yearend transition to Payroll Outsourcing Services from the best payroll outsourcing team of the company is an excellent plan, beneficial to all. Here is why:
  • It puts your mind at peace because professionals have taken over

    – A new year calls for a clean slate, from the employees and the employers’ standpoint. The company has one less thing to be concerned about since the professionals will take care of it. For example, policy documents and other compliance forms will be entirely taken care of by the company that you have outsourced for payroll services. The company can focus on setting monthly targets and yearly goals.
  • Keeps the employees in good spirit

    – It is essential for the employees of a company or business to be fully satisfied for the company to grow and develop into an empire. For optimum output, the employees need to put in the optimum effort, and that will happen when they find the incentive to work. When the employees shall notify of the fact that the outsourced payroll services are offering direct, automatic deposits, the employees will be convinced that the company is looking after them, thereby work harder and with more diligence.
  • Focus on strategies

    – The essential task of a business is not to indulge in matters like payment of the employee remunerations. Any efficient business has a separate section or department to take care of that (like payroll outsourcing services). The business of the company should ideally be focusing on coming up with strategies and goals that these employees shall have to follow. In other words, by outsourcing payroll services, the company frees up a lot of time and resources that it can dedicate towards building strategies and targets for the entire workforce to achieve, thereby contributing to the growth of the company.
  • Mid-year data rollover is no longer a concern

    – It is a fact known and dreaded by all – transitioning mid-year calls for a lot more effort and time that is absolutely unnecessary. The biggest advantage that companies get by transitioning for a new financial year is that the payroll data conveniently rollover on the 1st of January. The entire process of translating and transferring the current payroll data to the team or company of hr & payroll outsourcing in India is altogether avoided, making the entire process seamless and, quite frankly, smooth.

What are the pros and cons of outsourcing a company's payroll function?

Like all services, POS also comes with a few advantages and a few disadvantages. We have shed light on some of the pros and cons of paramount importance and may help the reader make a well-informed decision. The pros and cons of outsourcing payroll management are as follows:


  1. Time-efficient

    – This is a point that has been highlighted before as well. The company, no matter how big or small, cannot afford to dedicate a big chunk of its time towards sorting out the payment of the staff. It might sound like an easy task, but there is so much to process and so much documentation. It is just not feasible for the company to dedicate its time and resources towards that, where it can actually dedicate the same time and resources towards building a strong foundation or maybe making new ventures.Payroll Outsourcing Services are beneficial since they allow the company to focus on things that it should be focusing on and gives them back the time they need to allocate towards more important objectives. Also, since they are professionals, they take way less time to process the same, and this way, even the employees are happy with the timely payments. Overall, the company’s efficiency is increased by a big margin.
  2. Additional services

    – This is something that not a lot of people aware of. Outsourcing payroll services also allows you to access several other payroll services like 401k contribution deductions and direct deposits. These are not payroll services that companies are generally able to offer on their own.
  3. Convenient payroll tax filing

    – The financial reports created by outsourcing payroll services make it a lot easier for companies and businesses to file for payroll taxes. In fact, sometimes, the payroll tax filing process can also be outsourced by the companies, thereby ridding themselves of any and all responsibilities regarding payroll services and payroll tax filing.
  4. Regulatory compliance

    – Payroll tax filing is not the only thing that companies generally have to worry about if they do not outsource payroll services. The current tax laws need to be abided by, and that is something that the company can automatically do if they opt of r payroll outsourcing services. Outsourcing payroll services help a company stay in regulatory compliance with the tax laws.
  5. A lot more economical

    – The money, time, and resources that a company has to spend on calculating the remuneration, dishing out the paychecks, drafting the financial reports, and then filing the payroll taxes can be quite burdening, tiny businesses. By opting for Payroll Outsourcing Services, companies can drastically cut down on those costs.
  6. Better security

    - Protection of personal data and information is becoming a rising concern among employers and employees alike. Outsourcing payroll services can help the companies prepare a more secure data protection system by creating a data backup server to prove an end to end encryption of the company and its employees’ personal information.


  1.  Correction processes can be a hassle

    – One or more of the paychecks may be incorrect in value. In such a scenario, making appropriate amendments to the paycheck becomes a long and tedious process.
  2. Invasion of privacy and loss of data

    – Sensitive information regarding the company and the employees need to be shared with the third-party hired for payroll outsourcing services. There is always a risk of data theft or tampering.
  3. It isn’t always cost-effective

    – Not always will you find a payroll service provider who provides custom or tailored payroll services. This means that companies might have to take on or pay for more than they actually need. This ends up costing them a lot more than usual. Therefore, it is safe to say that Outsourcing Payroll Services is not always beneficial or economical.
  4. No immediate access to payroll data

    – If you want to make changes to the payroll data or check something, you cannot get immediate access to the payroll data because most of the operations or services will be carried out off-site. You would have to communicate with the third-party and then get the data according to mutual convenience.

These are a few of the pros and cons of opting for Payroll Outsourcing Services that companies need to keep in mind before making an informed decision.

Who needs payroll services?

In all honesty, every company dedicated to progress and development should allow a third-party to take over this responsibility since this is a recurring phenomenon. Small businesses, medium-scale businesses, and large-scale industries need POS to function at an optimum efficiency level.

That being said, small-scale and medium-scale businesses are the ones that benefit most from Payroll Outsourcing Services. This is because they do not need a large team of third-party payroll service providers to handle their payroll needs, thereby saving costs on both ends. By outsourcing payroll services, these small-scale and medium-scale industries or businesses get more time on their hands to dedicate towards realizing their short-term r long-term goals and diverting their resources towards that.


Payroll Outsourcing Services are amongst some of the most widely sought-after outsourcing services. So many companies have benefitted from employing a third-party company to look after their payroll needs. This article aims to highlight the advantages and the disadvantages of the same so that companies can evaluate them and outsource payroll services if need be. It is always best to let each department focus on their own objectives, and that is why outsourcing payroll services can be a good idea for some.


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