Opting for Payroll Outsourcing Over In-house Payroll Processing


As an HR manager or a business owner, you can handle the company’s finances on a regular basis. Whether to manage the payroll via in-house payroll strategies or outsourcing payroll to a third party is your call. Many businesses are confused and have divided opinions and often debate over payroll outsourcing vs. in-house payroll processing.  

There are discussions about the advantages and disadvantages of both, outsourcing payroll work and in-house payroll. According to industry experts, it is advisable to choose any one option depending on your business needs and priorities. 

Let us take a glance at some of the plus points of outsourcing payroll:

Outsourcing payroll involves partnering with a reputed and verified payroll team or service provider to organise your payroll process. Most providers are likely to automate the entire payroll process to save the valuable time and effort needed to manage payroll every single day. 

As a business owner, you can gain the following benefits:

  • Saving on cost – Companies prefer outsourcing payroll processes primarily to save money and overheads. Company owners find that payroll outsourcing  is cheaper and the costs involved are less than paying the salaries of in-house payroll employees. Businesses spend less on outsourcing payments as compared to monthly payments to in-house employees.
  • Saving time – Payroll service providers offer automated payroll processing, which can save both time and resources for a company. Outsourcing payroll is akin to getting a professional full-time employee who works 24/7 and gives accurate results.

    Unlike an in-house payroll process, there is no room for human error or time constraints. Allotting the payroll work to a third party also means that you and your employees can devote more time to core business activities. Outsourcing payroll is one of the smartest ways to salvage time and energy.
  • Choosing Convenience – Payroll outsourcing companies provide simplicity and convenience for numerous businesses so that they can multitask. Through outsourcing, you can streamline all related tasks like accounting, onboarding, payroll, etc and make it very convenient to manage your company affairs.

    According to a business study, almost 40 per cent of businesses who opt for outsourcing payroll services felt that factors concerning time-saving, attendance, and HR benefits were some of the influencers that helped them decide to outsource.

In-House Payroll 

In-house payroll can be tiring and responsible work that needs the time and attention of your employees. Business owners who conduct in-house payroll processes have to hire accountants, bookkeepers, HR personnel or an entire HR team to complete their payroll responsibilities. When payroll processing is handled in-house, there is much room for error. 

Check out the following disadvantages of manual payroll processing: 

  • Risk of Human Errors & Penalties: An in-house payroll without any automation, makes the process prone to human errors. A study showed that hundreds of companies incur penalties and fees for non-compliance with government rules and regulations. Companies that suffered penalties were mostly those who conducted in-house payroll processing.

    Missing the deadline for submitting payroll reports can also lead to subsequent penalties and losses. An in-house HR team should be capable enough to handle payroll along with other responsibilities.

  • Complex and Time-Consuming: In-house payroll can be very tedious and time-consuming. It needs to be done accurately, without any mistakes, and under a stipulated time frame. HR payroll in-house teams may spend more than 4 hours to calculate payroll (every pay period), which sums up to almost 240 hours per year. Small businesses with small HR teams may find it very hard to manage an in-house payroll system.

    If you add tax calculations to the process, it can get more complicated. Compliance with the rules and tax regulations is becoming more challenging every year. This is one primary reason for businesses to partner with payroll outsourcing companies rather than take unnecessary risks with in-house payroll processing.

    To put it mildly, when one is pitied against the other, outsourcing payroll vs. in-house payroll processing, payroll outsourcing is the clear winner.

Our Clients

Get in Touch