Simple Steps to Setup a Payroll Outsourcing in a Small Business

If you are reading this, it is likely that you are considering payroll outsourcing to free up your time to focus on your core business activities. Perhaps you have already searched online for HR and payroll outsourcing companies around to take care of this mundane yet mandatory business activity for you. “Which are the best HR outsourcing companies in India?”, you might have enquired in your business circle too. There are many companies which provide HR payroll outsourcing services in India but they may not be offering the best solutions to suit your company needs. To research, identify and select the best HR payroll outsourcing company and set up payroll outsourcing for your small business smoothly is an arduous task in itself. You can ease out the tension in this transition by following these simple steps:

1. Assess Your Current Payroll Process

It is an important step as it gives you a clear picture of your existing payroll process - man-hours spent on payroll management, the kind of reports generated, gaps in the information required and/or data redundancy if any.

2. Define Your Expectations and Requirements From Payroll Outsourcing

Findings about the weaknesses in your current payroll system will help in setting the scope and requirements from payroll outsourcing. This will give you clarity on whether you need end-to-end payroll management solutions [LINK] or want to outsource basic payroll calculations only.

3. Explore HR Payroll Outsourcing Companies in the Market

Now that you have assessed your existing payroll process and have defined your expectations from the payroll service provider, it is easy to explore and analyze which service provider will be the best to meet your outsourcing needs.

4. Request a Proposal From Shortlisted Payroll Outsourcing Companies

You can share your clearly defined payroll management requirements and request a proposal from the shortlisted companies. Your well documented payroll outsourcing scope will enable the service providers to respond quickly with a well suited solution, saving time and effort on both sides.

5. Study and Evaluate the Proposals

It’s time to study the proposals and evaluate them. Here are a few things you should look for in a proposal:

1. Details of your current payroll process and its limitations
2. Detailed recommendations based on your requirements
3. A roadmap to the solution recommended by the payroll outsourcing company
4. A step by step implementation plan with clearly defined role of team members (in-house as well as outsourcing team)
5. Transparent pricing for implementation, maintenance, training etc.
6. Service guarantees - delivery timeframe and milestone achieved with each, system up-gradation in accordance with future business needs, etc.
7. Support guarantees – technical support, staff training, etc.

6. Select the HR and Payroll Outsourcing Company

This is one of the most crucial steps while setting up payroll outsourcing for your small business. Keep the following factors in mind while selecting the service provider:

1. Track record – are there some happy customers?
2. Quality of the team - knowledge and expertise in the field
3. Financial stability
4. Readiness to respond and help
5. Competitive pricing

7. Implementation of the Payroll System and Transition

To ensure a successful implementation and transition of payroll outsourcing, you should:

1. Communicate to your employees regarding the processes that are being outsourced and the ones that will remain in-house, so that there is no ambiguity regarding changes in their job role, if any.
2. Clearly define and communicate the responsibilities to be shared by your in-house payroll team members and your payroll outsourcing company. This will minimize the chances of accountability conflict in case of errors in payroll processing.
3. Encourage your in-house team members to collaborate with your payroll service provider who can act an expert guide on account of their knowledge and expertise in the field.

Payroll outsourcing is a partnership between your organization and your service provider which can be successful and cost-effective if you follow the above steps for setting it up.