Payroll Outsourcing: Here’s a Great Way to Save Money

Payroll Outsourcing

Payroll outsourcing can save you a lot of money.

Payroll outsourcing can reduce your hassle.

Payroll outsourcing can save your time.

Payroll outsourcing can make payroll calculations easier.

If you have heard any of this at least once and you are wondering what it actually means, you are in the right article.

Many experts believe that payroll outsourcing service provider can reduce the hassle and save you a great deal of time. But, it is hard to explain why. Hence, to define the benefits of payroll outsourcing in saving time and efforts, we have created a small guide. Dive in and start exploring.

What is Payroll Outsourcing?

Let’s start with the most basic detail, what is payroll:

Payroll is a collective term utilized for multiple activities. It includes the salaries of the employees, deductions, tax calculations, PF submissions, TDS submissions, and return filing of all these tax submissions. In simple words, everything related to the calculation of the net salary of the employees comes under payroll.

What is payroll outsourcing?

Payroll outsourcing is a process of outsourcing these tasks to an external agency. This external agency has resources and correct tools to handle everything. You only have to pay for the services you acquire.

Most of the time, you can customize your package with the payroll provider. You can add or remove services according to the needs of your organization. For example, you can also include accounting support with Indian payroll process.

Save Time and Money Through Payroll Outsourcing

Payroll outsourcing service provider can save your time and money in several ways. Let’s explore these ways one by one.

1.    Expert Access – Cost and Time

Before we discuss how this is the route to cost-effective execution, imagine this:

You are facing issues in payroll calculations and you have already received a notice due to wrong TDS submission. Hence, now, you have decided to hire an expert for payroll. You have luckily found an expert with 5 years of experience. But, the salary is on the higher end. The expert is also asking for updated software for effective calculation. You need to offer benefits to this employee such as health cover, gratuity, etc. You need to submit the PF and taxes of this employee. Lastly, you need to also offer incentives to this employee.

When you finally calculated the cost of hiring this employee, it was a lot of money. So, you dropped the route, moved back to your old way of payroll calculation.

Or you chose an employee with less experience and somehow managed to not fall on the other side of the compliance bar.

Sounds familiar?

We thought so!

Payroll outsourcing can save you from all this hassle. Your payroll outsourcing service provider already has an expert team in place.

How they are able to manage this requirement?

This is because your payroll outsourcing company caters to several clients. The fund availability as well as the need of the profession makes them hire experts. You can simply utilize this opportunity, outsource your work, and hire experts without additional costs. If you only utilize their services for payroll calculations, you only pay for payroll calculations.

This not only reduces the cost of hiring experts but also saves your time. With in-house employees, you need to invest a lot of time nurturing this employee. With a payroll outsourcing service provider, not so much.

2.    Reduced Risks – Cost and Time

Let’s be honest, employment has some risks.

Firstly, you can hire less-experienced employees for payroll who can make mistakes, which can lead to compliance penalties. These penalties will eat up your money and time.

Secondly, there is always the risk of the employee leaving and vacating the position for days or months. Then, your work will be hampered, efficiency will reduce, and the overall structure will be hampered.

In payroll outsourcing, this grey area is reduced. You know the company has experts on board and even when these experts leave, the service provider becomes responsible for handling the shortage of staff.

You will get your work no matter the circumstances because they have several employees working on payroll contrary to the one or two employees that you may be able to hire.

3.    Improved Accuracy –

If you look at it, then accuracy is the prime responsibility of the payroll outsourcing service provider, isn’t it?

This provider is expected to stay on top of changing regulations, laws, and other activities. It comes with the package automatically.

So, your payroll outsourcing service provider is expected to have experts and skilled employees onboard. These employees help in improving accuracy and reducing errors in payroll calculations.

Following are the errors that you can reduce with payroll outsourcing:

      • Errors in TDS calculations
      • Errors in PF calculations
      • Errors in ESI calculations
      • Errors in net salary deductions
      • Errors in TDS, PF, and ESI returns
      • Errors in incentive calculations

All these errors are not only subjected to a penalty (most of the times) but also lead to poor organizational reputation.

When you utilize payroll outsourcing, you can reduce the number of errors in the system, hence, reducing the cost spent on correcting these errors. You can additionally save yourself from ruining your reputation in front of employees.

Advantages and Disadvantages of Payroll Outsourcing


      • You don’t have to hire more employees for the payroll. You can simply outsource and fulfil the requirements of your business. This also reduces the hassle of managing these employees, offering them incentives, and spending on their training.
      • Even if you manage to hire an expert in-house, you may be able to hire one or a maximum of two employees. Payroll is an activity which requires several subject matter experts. This is something your payroll outsourcing service provider will be able to offer you. They have a team with multiple people who understand payroll end-to-end.
      • The time spent on payroll will be reduced because you have to only check on your payroll provider. You don’t have to execute these tasks yourself. With an in-house team, you have to give in more time and efforts for the management.
      • You can increase your package and include various other related tasks in your payroll outsourcing package. This will not only give you additional services but also help you bargain for a cost-effective package from the provider.
      •  When you reduce the time spent on payroll activities, you can utilize this time in more strategic roles, which helps in improving the efficiency of the whole organization.
      • Lastly, with effective payroll execution, you can receive enhanced reports. These reports can help you analyze the efficiency of payroll, the money spent on each employee, and the overall financial effectiveness of the workforce. Using these reports, you can assess the future workforce requirements of your organization, plan for incentives, etc.


      • Lack of security is the major issues that many organizations face when they utilize payroll outsourcing. However, you can reduce this issue by selecting a payroll provider that has a good security structure. You can check their security platform beforehand.
      • Another issue is lack of communication, for which a lot of payroll outsourcing service providers now offer a dedicated person to the organization. You can contact this dedicated person for all your payroll related issues. This improves communication as well as reduces the disconnect between your team and their team.
      • It is also possible for you to partner with a service provider with less experience and fresher employees. This can cause errors and reduce the overall quality of the process, which brings you back to the same position.
      • You can eliminate this issue by thoroughly analyzing the portfolio as well as online reviews of the payroll outsourcing service provider. This step can reduce the chances of low quality to a great extent.


No doubt Indian payroll process is difficult, which is why there are several drawbacks of even using payroll outsourcing. But, as we have already discussed, you can reduce or eliminate these issues with smart and intelligent decision making. Hence, read the above data and carefully measure all odds while selecting your payroll outsourcing service partner.

For instance, Paysquare. The organization has several years of experience, multiple fruitful collaborations, and skilled employees. You can check their reviews and website. You will only find the whole online presence radiate experience and efficient working. A provider like this can eliminate all the drawbacks of payroll outsourcing that may have to face under regular circumstances.