A straightforward diagnosis of the current situation is that we are living the biggest and the worst global crises. No business, industry, and individual have experienced a similar pandemic situation and its economic impact in the past. The national borders are sealed, businesses are still struggling to make ends meet, and work from home has become the new normal. Multiple employees have stopped commuting and people are scared of moving out of their homes.

How the payroll sector was crippled due to this pandemic?

Let’s find out.

When the COVID-19 finally hit our country, business functions started running behind the race. The production was halted, sales were hampered, and services were delayed. The direct impact of this situation was seen in the payroll sector.

This department of the office is a mission-critical unit that needs to work better and work faster. The employees needed they pay, especially the one working overtime such as hospital management. However, the pandemic made management so difficult that the HR department was engrossed in handling other crucial job roles such as making schedules, maintaining communication, etc.

Payroll somewhere got lost in this havoc. Hence, an urgent need for payroll outsourcing emerged.

In the following sections, we have discussed everything that you need to know about the benefits of payroll outsourcing. Let’s dive in and start exploring how payroll outsourcing can save your payroll department.

Understand Payroll Outsourcing

Meaning of payroll outsourcing is exactly as it sounds, you outsource your payroll functions to a third-party. This third-party can be a person or a company. Generally, it is an organization with multiple employees to handle your payroll-related tasks.

What is included in payroll outsourcing?

    • Payroll of employees
    • Bonuses and incentives
    • Taxes and similar deductions
    • Reimbursements
    • Reports
    • Pay slips

The payroll management service also offers an advanced analysis of your payroll processes. It also includes an employee portal, which enables the employees to track their payroll without any hassle.

We are sure that you may be wondering, “Why you should think about payroll outsourcing service?”

In the following sections, we are going to discuss exactly that. Let’s move on and see why payroll outsourcing service can save you money, help you with employee management, and save your time.

How You Can Save a Lot Through Payroll Outsourcing Service?

Before discussing anything, here’s an example for you to understand the situation:

Suppose, you have a company of 20 employees. These employees are all full-time workers of the business, who were working even during the COVID-19 lockdown.

Now, if you have to hire an employee to handle the HR activities, how much would you pay to this employee?

Note: We are considering one employee because for a small organization, it is not possible to hire multiple employees for one task.

We are guessing that the salary would be somewhere around INR 25,000; more or less.

However, when you outsource the same task to a business, you will get the same services at around INR 10,000.

Can you see the difference?

The employee management will cost you more than 3 lakhs in a year. But, payroll outsourcing service will cost you approximately 1.2 lakhs or a little more or less than that in a year.

While that is just one way of saving costs with payroll outsourcing, there are other ways too.

Firstly, your management reduces and this responsibility shifts to the provider. So, they become responsible for managing their employees, offering them incentives and training.

Secondly, with proper management, you can reduce costs. When you have proper reports and performance analysis, you can check the accurate data for better incentive, reimbursement, and bonus management.

Reduced Risks

It is obvious that when you hire employees, there’s a chance of hiring wrong employees or an inexperienced one. The lack of experience can also mean that the payroll employee is not equipped to handle the compliance requirements of the organization. And we all know when compliance activities go wrong, compliance penalties follow. These penalties can exhaust your time and resources.

Further, apart from hiring an inexperienced employee, retention is always at risk. If this employee decides to leave the organization, new hiring is costly. You need to find the candidate, offer them benefits, spend money on their orientation, and even train them. Not only will this cost you money but also hamper the functioning and efficiency of the organization for the time being.

With payroll outsourcing, you can mitigate these bottlenecks and risks of the company. You have access to experts, and whenever these experts leave your outsourcing provider, you can contact another expert without thinking about recruitment. Your work is achieved regardless of what is internally happening in the outsourcing company.

Expert Access

As a small or medium organization, it is not possible to hire a full-time expert for the company. Even when you manage to hire an expert, how long can you manage to retain this employee? You may have to give pay raises which may not satisfy your current revenue or cash flow structure.

However, outsourcing payroll offers you access to expert employees. These are some of the best payroll professionals, who have the expertise of this field in and out. From being able to engage employees to calculate payroll keeping taxes in mind, these experts can achieve every task without much hassle.

Through your outsourcing partner, you have access to human resource experts every time. Whether you are facing issues with your transactions or cash flow, you can reach out to these professionals and clarify your doubts immediately.

The cost incurred in outsourcing is much less than hiring experts in-house.

Benefits of Payroll Outsourcing: How You Can Manage Employees?

More than anything, a payroll outsourcing service helps in managing employees. Here’s how:

Your employees are your best asset. Don’t you agree?

Of course, you have your customer whom you can’t ignore. But, how would you cater to these customers without your employees? It’s not possible.

Payroll outsourcing offers a way to manage employees without any hassle.

1. Professional Guidance

You have guidance from professional experts, who are not used to making mistakes. These people are the best there is in the industry.

When you are struggling somewhere, you can just call up and ask queries from these experts. Your outsourcing partner is there to support you at a given point in time. They can help you with complex payroll structures, intricate taxes, and other similar crucial matters. Simply put, you get guaranteed support from the outsourcing partner’s team.

2. Better Employee Satisfaction

When you have a payroll outsourcing service, you can select the most feasible option for employee satisfaction. This means that there are various ways to streamline and customize payroll for every employee. For example, receiving the salary through cheque or deciding payroll bifurcation, etc.

Further, since you have specifically hired an outsourced team for payroll, this process is always on time, which makes employees happier.

Overall, this customization in the payroll leads to better employee satisfaction, which, in turn, improves the retention rate of the organization.

3. Updated Data

Your employees have the ability to check their payroll data anytime, anywhere. The employee portal is always updated, which means that the HR teams don’t need to answer every small query. Employees can directly keep track of their salary details and payroll particulars.

How Payroll Outsourcing Can Save Your Time?

Payroll activity contains an array of sub-activities. These sub-activities are time-consuming. Multiple times, when calculating payroll manually, the HR team needs to spend days to compute everything. There’s just so much to do.

When this responsibility is eliminated and handed over to an outsourcing partner, it is easier to focus on more strategic HR responsibilities such as employee training, retention, etc.

How To Select a Payroll Outsourcing Service?

We are sure that you are already convinced that payroll outsourcing service is the right choice for you. This is why the final section of our discussion will explore the ways to select the right payroll service.

1. Where to Look?

Always look for vendors with effective and reliable services. You can’t simply search on Google and go for the first payroll provider you find. Of course, sometimes, that is the only option. But, do your research before finalizing such as check reviews, get a demo, etc.

The best method is to ask for recommendations from friends and family members.

2. What to Ask?

    • What is the turnaround time?
    • Who will be responsible if mistakes are made?
    • Who will be your contact person?
    • What type of reports you will get?
    • What will be included in your package?
    • What technology is being utilized for payroll computing and management?
    • How taxes will be computed?

3. What’s the Price?

Before you pick any vendor, evaluate your budget first. Also, decide the upper and lower marker for how high and low you can go according to the services offered.

Once you have this in mind, move on, and stick to your budget for optimum and cost-effective services.

4. A Test Drive?

If you are still unsure of the services and vendor reliability, ask for a demo. There’s no harm in asking for a demo. You will understand their working, support, consulting, and expertise in the area. This will give you a clear idea of how you can collaborate with the payroll outsourcing service.


Payroll outsourcing is the need of the hour. With broken business structures and hampered economy, one thing that we can immediately fix is payroll processing. When this is streamlined, employee satisfaction will increase, which will lead to an increase in business productivity. This means you can again move towards business success.

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