As businesses gear up for the rapidly changing dynamics of the ecosystem, it becomes imperative that they focus on the core functions and outsource the non-core functions such as payroll to experts.
Payroll outsourcing not only gives you more time to work on creating better business strategies but also ensures that regulatory compliance and procedures are deftly handled by experts.
Payroll outsourcing defined: Offering customized solutions to manage end to end payroll requirements such as processing employee salaries, managing tax deductions, generating form 16, attendance and leave management, payroll related reports, full and final settlements, and compliance management-PF/P.TAX. /ESIS/Taxation returns filing are some of the services provided under payroll outsourcing.
Quick Glance at the Benefits of Payroll Outsourcing
- More time for critical core activities such as strategizing, operations, and marketing
- Reduced cost
- Mitigation of risk of non-compliance and non-adherence to processes
- Getting expert advice on better talent management
- Keeps you updated on changing trends in talent acquisition, performance management, and retention
- Ensures security of confidential payroll data through reliable networks
The upward trend seen in the outsourcing of HR and payroll functions in the last few years is projected to continue and grow by leaps and bounds. Organizations are becoming conscious of the efforts and resources they may save by outsourcing payroll and its long term impact on the profitability of the company.
According to a study by the Global Industry Analysts Inc., HR outsourcing is projected to touch an enormous figure of USD 43.8 billion by the year 2024.
This growth can be attributed to increasing awareness amongst the organizations about optimization of costs, enhanced the operational efficiency of HR departments, streamlining core operations and adherence to compliance requirements.
The report also highlights that by 2024, Payroll outsourcing will continue to be the largest domain in outsourcing closely followed by administration services. Asia- Pacific is projected to become the fastest growing market with a CAGR of 8.8% in terms of outsourcing HR functions.
Payroll outsourcing in India is witnessing some game-changing trends owing to factors like technology, investments, employee relations, and processes. Businesses are increasingly adopting the new trends in order to leverage the benefits brought in by them.
Cloud-based payroll services
The flexibility of accessing data anytime from anywhere coupled with improved speed, accuracy, and affordability makes cloud-based payroll services extremely attractive for organizations. The systems can be customized to suit your organization’s requirements, scale, and costs and also offer an enriching employee experience.
Cloud-based services make it feasible to store all HR related data in real time which is easily retractable as and when required. It also offers an easy solution to the tedious task of backing up data through simplified and affordable automation.
HR Solutions for SMEs
A report by AsiaBriefing (Payroll Processing and Compliance in India) highlights that small and medium businesses in India face immense challenges due to regulatory requirements related to labor statutes, judicial standards, and payroll deductions. The report further emphasizes the role of outsourcing payroll to optimize the costs of business.
While on the growth trajectory, SMEs are partnering extensively with HR outsourcing service providers to take care of challenging issues related to workforce, payroll management, and compliance. According to a survey, SMEs cited that easier access to the system, security of data, and ease of use as the three main reasons which make cloud-based payroll outsourcing lucrative to them.
If you are an SME with inadequate budgets for the dedicated HR department or a foreign player not conversant with domestic regulations, payroll outsourcing may be the solution for you as it gives to benefits of compliance management, streamlining HR functions and maintaining confidentiality and transparency.
Payroll outsourcing for Startups
A startup founder has to focus more on core business functions. Trying to perform too many tasks at a time not only hampers productivity but also leads to wearing down early in the process.
It is found that one in three start-ups are penalized for non-compliance of regulatory procedures related to taxation or labor statutes making the founder directly liable.
India has the second highest number of start-ups after the USA but 90% of them perish due to cash running out in the initial years of conception. Saving costs and focusing on revenue-generating activities is a priority for start-ups in the initial years. Outsourcing non-core functions like payroll is no longer an option but a survival tactic for start-ups in the coming years.
More people-oriented than cost-oriented
As organizations become aware importance of the human capital and the need to provide seamless employee experience to them, higher investments in payroll outsourcing are foreseen in the next few years. Outsourcing relationships become more people-driven than cost-driven.
Payroll outsourcing in India will not only thrive in with changing trends in business but will also become a more specialized service directly contributing to business growth. In the Indian context, payroll outsourcing is set to gain importance as a long-term investment to build robust and reliable processes for the workforce.