How Helpful is Outsourcing HR and Payroll in this Digital Revolution

Outsourcing HR and payroll helps in this digital revolution

Over the last two decades, the digital revolution has toppled several industries, while the mighty forces of machine learning, cloud computing, and smartphone usage have only accelerated this disruption. This insurgence is conceivably most apparent in the consumer-facing industries, where new brands have appeared and managed to grab our attention, imagination, and engagement.


Small and medium-sized businesses have grappled with the daunting task of managing HR services and payroll for decades. However, a seismic shift in work standards and expectations has led companies to outsource various work areas, including HR and payroll. There are several benefits of outsourcing HR and payroll. Today we are going to discuss them in detail.


What are the Benefits of Outsourcing HR and Payroll?


Cost Saving:


HR – One of the most significant benefits of outsourcing HR and payroll services is cost savings. Employing people who, in turn, will hire people for your company to fulfill various other jobs in your company is a costly affair. HR management firms help businesses reduce risk. 


Employment and labor laws change regularly, and employers may find it hard to stay updated with these regulations. However, it is also significant that one has the knowledge of these HR-related laws lest they impact the workplace. This is especially to evade all expensive lawsuits that the employees may bring upon the business. HR companies take care of the laws and regulations, audit policies, and ensure that your business runs smoothly. 


Payroll – The bigger companies can afford to have a dedicated payroll department. However, the same cannot be said for a small or medium-sized business. Managing payroll is a daunting task, and several calculations need to be done before dispersing the employee salaries. Moreover, there are different types of penalties for incorrect payroll filings and payments. 


Payroll mistakes anger employees and is best avoided. Therefore, payroll should be outsourced to firms with the latest software and skilled people handling the jobs and filing the reports for your business, so you are safe from paying extra or annoying the government and the employees.


Recent Skills Inclusion:


HR – Skilled and knowledgeable people are always appreciated in a business. However, if you are looking forward to expanding your business or adding a new department, you require experts to handle the job proficiently. Outsourcing HR lets you have a trained and practiced workforce on new operations of the business. 


The outsourced HR firm takes care of all HR activity and keeps track of the employees’ performance and development outsourced by them. This helps reduce the responsibilities of the managers who already have other types of management jobs to take care of. 


Payroll – With the advancements in the digital world, several software and other AI and VR-based techniques are being implemented in payroll. Outsourced firms have young talent that is thorough with the knowledge of the latest techniques used in payroll management. Your business would require imparting continuous training to your payroll department to keep them updated with these skills. 


Outsourcing to other firms omits you from all these necessities. Instead gives you access to clean services where your employees receive their wages without you having to worry about how it was done.




HR – Hiring people is not easy. You need to be able to identify people with skills who have the potential to work and get you the desired results. A business always sees people come and go. The departments must always require employees working to remain functional and productive. Outsourcing firms always have a ready pool of skilled people who have the required skills to perform your job. 


Payroll – Payroll is time-consuming, especially with the many calculations that need to be done before dispersing the wages. Outsourced payroll firms offer increased accuracy compared to in-house payroll departments as professionals who are practiced at their work prepare, evaluate and analyze the payroll. 


Outsourcing HR and payroll frees up time and resources, allowing your business to focus more on core tasks. This eventually helps the business to expand and grow. 


How will Outsourcing Increase the Effectiveness of HR?


Every organization is responsible for its employees. They are tasked with developing a meaningful career for them within the organization. This is possible only with regular employee training and performance evaluations. All this is time-consuming and involves effort.


Outsourcing leadership development and employee performance management to an outsourced HR firm can help in easy development, implementation, and management of the plans that will further help achieve the organization’s goals.


Also, on average, a business loses 12 weeks of productivity if a high-performing is replaced. Therefore, it directly has an impact on the revenue that cannot be quantified. 

Outsourcing firms can help with both recruitment and training the employee for the specific job. This will help in hiring the right person for the job. It also facilitates smooth transition in terms of onboarding and training for the new employees.


Having your HR functions outsourced eliminates all the mistakes that may happen because of a lack of experience. In addition, having a professional HR consultant take care of important matters such as compliance with labor laws and regulations and other HR functions helps smooth the business’s smooth operation.


It enables the revenue-generating segments of an organization to function effectively using advanced business methods so managers can move their focus from paperwork and get themselves involved in reviewing the business’s core activities and developing various strategies to increase employee efficiency and profits.


Many HR functions can be outsourced, from recruiting to competency mapping and from employee training to leadership development. Outsourcing is time-efficient, cost-effective, and expertise-effective way to enhance the core competencies of an organization.  


How has HR Changed Due to the Technology Revolution?


1. Technology has Enabled Smart Recruitment in HR


The process of hiring is both costly, tiring, and time-consuming. However, AI or Artificial Intelligence and automation have made things easier. As a result, the process of locating skilled people who fit the job profile for your company is accelerated. From chatbot interviewers to automated resume screening, several intelligent solutions have brought a revolutionary change in the hiring process.


There also exist in some areas, like evaluating the hard skills of a person, where AI is outperforming the humans. Using AI to perform recruitments helps the recruiters to divert their attention to conduct a culture-fit and soft-skill evaluation in a detailed way. AI and machine learning are changing the way employers are hiring candidates. Technology promotes proactive hiring, which lets them hire employees instead of waiting to receive applications on a career website.


2. Better Performance Management


Performance management has been labeled as one of the most tedious tasks under the HR function. Traditional ways require maintaining data in excel or other defined systems through which the HR team monitor, process and facilitate regular employee reviews. Technology has helped in streamlining this process by eliminating several unnecessary steps. Data-driven performance management has brought about a novel level of data competency where people analytics is helping managers and concerned heads take precise decisions about the employees more effectively. Analytics create actionable visions and support data-driven conclusions when it comes to promotions and appraisals. 


3. Better Inclusion and Diversity


Several reports reveal the relationship between a more culturally and gender-diverse (equal distribution of people with different gender) workforce and growth in profits. Customers value diversity and prefer to be associated with such organizations. The technology ensures that diversity and inclusion are present in the recruiting strategy of an organization. People analytics helps understand salary gaps and other discrepancies in the workforce, thereby promoting a healthy and inclusive working environment for all. 


4. HR Has Become More Strategic


Gone are the days when an HR room or department was seen overflowing with files and papers. The HR professionals were forever seen overburdened with recruiting, managing employees, data entry, and following up with compliance reports. Technology has bettered the HR department’s strategic capabilities, efficiency, and accuracy by streamlining analytics, data maintenance, and reporting. This has helped HR to play the role of business as their strategic partner and help it grow.


5. Better Communication and Collaboration


According to Harvard Business Review, more than 90% of employees look forward to being communicated weekly on the pandemic, and 29% preferred that they be informed about it every day. Hence, communicating with the employees is significant. In addition, the inclusion of digitally advanced communication tools has helped enhance employee experience in the business. 


HR can easily communicate or send across information to the employees. Social intranets, broadcasting tools, career sites, and newsfeed are the new, effective and efficient ways to communicate with the employees without interrupting their work or piling on to their already overflowing email. Emails are reliable, but they are not engaging. The mentioned tools give an opportunity to the employees to communicate. 


Hire Paysquare Payroll Services


The mercurial legislation and statutory frameworks of a country related to HR and payroll can be challenging, exhausting, and resource-consuming. To give undivided attention to the core competencies of your business, you can outsource payroll and HR functions to Paysquare Payroll Services. We have been providing end-to-end services to several clients across India. Get in touch with us to understand more about our services.