Why should companies outsource Payroll?

What mind is to the body, Payroll is to a business. However, for many organisations administering the payroll process can be daunting.

The critical question then is “Will outsourcing ease the burden?”

Payroll administration is not just about paying your employees accurately and on time, but navigating any tax and legal regulations that apply in your region. India’s booming business hubs have attracted a spectrum of international businesses, however achieving a high level of payroll performance in the Asia-Pacific region presents challenges for organisations of any size – from established Enterprise players to SME start-ups.

The process can be particularly difficult for foreign or expat businesses, owing to lack of local regulatory expertise, which may easily result in errors and oversight. This leads to administrative difficulties, compliance penalties and unhappy employees.

With compliance and performance, a priority for thousands of businesses across India, they choose to outsource the payroll process. Should you be doing the same?

Technology and Expertise

Businesses that choose to handle payroll internally would need staff, who know what they are doing. Training staff to administer payroll comes with its own costs and risks of those staff leaving soon, or being unable to execute payroll duties owing to unforeseen circumstances or other internal commitments.

Beyond its dedicated role, an outsourced team will have access to the latest payroll software and technology and be aware of any new administrative trends or legislation. These factors could mean external administrators, will be able to bring in their expertise to process payroll quickly and more effectively than a less experienced or less well-equipped internal team – and pass the benefits onto their clients.

Compliance and Errors

Payroll administration is more than simply issuing payslips. Ensuring compliance with legal and tax regulations is a significant part of the process. Payroll mistakes lead to dissatisfied employees, potential overpayment, financial penalties and audits.

In these environments, outsourcing allows businesses without infrastructure, time or resources, or without a sufficient depth of regional understanding, to avoid costly compliance issues.

Scale and Flexibility

Your business may have been able to handle payroll for a small number of employees but as your organisation grows or changes, so will your payroll needs. In these instances, outsourced payroll presents a scalable and flexible solution. Your business might need to engage outsourced services during a period of transition, before reclaiming payroll when new infrastructure is in place. Alternatively, you may wish to scale the level of outsourced payroll service up or down depending on your budget, resources, or the size of your workforce.

Beyond Payroll Administration: Peace of Mind Matters

Businesses deciding whether to outsource payroll administration should think beyond cost. It’s certainly the case that outsourcing can deliver many visible benefits, but it’s worth remembering that it also has less tangible effects, within and without your business.

Effective payroll administration contributes to internal satisfaction, offering employees not just peace of mind but a solid foundation to perform at their best – impressing clients and, ultimately, delivering success.


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