Why Some Companies Excel At Payroll Outsourcing And Some Don’t

payroll outsourcing in india

It is true that some startups benefit from payroll outsourcing and some don’t. However, the count for the latter is relatively low. Any small and medium organization, business, and startup need payroll processing for dispatching salaries and calculating taxes. If these businesses outsource their payroll processes, they can spare this time spend on payroll for another important business processes.

Let’s understand what is business process outsourcing and how payroll outsourcing can help you.

Payroll Outsourcing Services

What Is Business Process Outsourcing?

It is a process of hiring another organization for handling some of your business tasks. In simple words, this third-party organization will become responsible for executing your business processes efficiently.

They additionally provide a team of experts, which would be otherwise hard to hire in-house. Many startups consider business process outsourcing because it is usually cost-effective than hiring resources and managing other related expenses.

What Are Payroll Outsourcing Services?

Payroll outsourcing is a part of business process outsourcing. In this, a company outsources its payroll processes such as salary calculation, deductions, and tax calculations.

There are various payroll outsourcing providers that focus majorly on offering payroll processing services. Their main aim is to look after your payroll work, ensure salaries are paid on time, invoices are cleared, and there are no compliance penalties. This enables business owners and entrepreneurs to work on other essential business processes rather than payroll management.

Some outsourcing services offered by payroll partners are:

  • Monitoring employee office hours
  • Calculating employee salaries along with deductions
  • Calculations of leaves such as paid leaves, sick leaves, etc.
  • Ensuring law compliance
  • Offering electronic services for information transfer
  • Filing and paying taxes

With this, all these tasks are difficult to handle in-house without a payroll software and experts to handle compliance. Payroll outsourcing providers have a full team with extensive knowledge of federal laws and other calculations.

Best Payroll Outsourcing Services for Startups

Check out these 6 tips to select the best payroll outsourcing partner for your startup.

1. Features Offered

Many payroll providers offer different payroll services, and some even let you customize your package. Look for an outsourcing company that either lets you customize your package with preferred services or provides all the services that you need. For instance, some companies may want a dedicated professional working with them to increase coordination, which may not be offered by many outsourcing providers. So, before signing the contract, check if all the services that you need are covered.

2. Cloud-Based Services

Cloud-based services are the need of the hour today. Without cloud services, how will you possibly manage every tasks and approvals in real-time? Cloud payroll services give you the flexibility of 24*7 access to your data, instant approvals, and immediate updating of employee attendance.

3. Cost-Effective Services

One of the main reasons for outsourcing payroll is money. Startups don’t hire full-time employees for payroll because it is a costly affair. If your outsourcing partner is not providing a comprehensive payroll package at cost-effective rates, it is not worth it.

4. Tax Compliance

Tax and law compliance is the most crucial task of payroll. Your provider should have professionals who understand federal laws and know how to calculate taxes effectively. Meet the team to make sure that these people are well-acquainted with taxation and compliance.

5. Data Security Provisions

When you outsource your payroll, you let your provider access confidential information of your employees. Your payroll provider should have a strong data security structure in place to avoid misplacing this information or compromising it.

6. Previous User Experience

Always check for reviews online to get a clear picture of user experience provided. You can also check with current or previous customers for honest feedback.


Payroll processing is as important as any other business process, and it is riskier because it involves handing over your employee data. So, use above tips to choose the best payroll partner.