Many businesses are unaware of the benefits of payroll outsourcing. Generally, the finance or HR managers believe that the cost-saving method is from an internal team that can handle payroll processing, which will help to maintain and control the company’s costing. In reality, it may lightly end up costing more and impact the business continuity negatively.

The below is the comparison of internal and outsourced payroll processing costings, which can save money in the long-term, improve the payroll process and stay competitive.

In-house payroll does benefit certain organizations due to the fact that it provides end-to-end control by the organization. But with this, it becomes a great responsibility. There is a variance of payroll software in the market nowadays, no matter which software is used by the organization, it requires the HR personnel to maintain the payroll processing. However, outsourced payroll will ensure the payroll is computed without needing an internal team to process. The vendor will take the responsibility to ensure the payroll runs accurately, on time with confidentiality assured. Reputable payroll partners can bring peace of mind to their clients.

Internal payroll management includes intangible hidden costs, rather than tangible costs with direct labour like employee salary, training, recruitment of payroll team. The other costs involves are:

• Payroll system and related associated upgrades, licenses, and maintenance
• Time-consuming. The payroll processing is not as ideal if the employee lacks experience in payroll processing. It may be a burden for the employee to take a longer time to complete the payroll processing task.
• Troubleshooting, if the organization have an obsolete old version or customized system that may no longer be supported,
• Indirect costs relating to overheads such as office space, hardware, equipment, and consultancy service that support the payroll team.
• Penalties for non-compliance or late submission to various statutory bodies or other errors.

Technology is a key hidden cost of In-house payroll, which extends to the ownership (or lease) of hardware, servers, software installation, technical support, and ongoing licenses. Technology infrastructure contains much more than what is easily visible. Security strategies, estimation of data storage needs, management of network infrastructure, and continued users software training are essential elements. Also, the face of Information Technology is rapidly changing and the costs of utilizing technology in business are becoming increasingly complex. You may even face expensive fees and be forced to upgrade to maintain legislative compliance. However, if the businesses outsourced to a vendor, the payroll service provider will bear all these costs and risks.

If the payroll processes are mostly computed manually without involving any payroll technology, it may cause the key personnel with overwhelming workload. However, outsourced service providers can offer you more competitive costs than internal functions due to economies of scale across multiple clients. When partner up with a reliable vendor, it can reduce your total cost of ownership, and allowed you to free up more budget to reinvest where you need it.

Another technical point to consider is the resources of In-house payroll team management. The payroll team needs to upskill continually, be confident with the complex calculations, and need to ensure the payroll process is in compliance, accurate and all the private and confidential data is handled safely. During the payroll process, inaccurate or late submission of statutory contributions, failing which undesired payroll audit will follow with possible penalty imposed to an organization.

During In-house payroll management, organizations often rely too much on key personnel due to the experience and private and confidential information. Therefore, if the key personnel is on leave, it may need back-up manpower during the payroll time. If the back-up resources are inexperienced, this arrangement may lead to poor payroll management, which may involve hidden costs and impacts the business negatively.

Payroll Outsourcing can be a sustainable way to build resilience into your business processes and safeguarding your organisation’s payroll process. As an extension of your team, the payroll service provider will improve your organization’s payroll process and ensure that the payroll process is in compliance. No matter how complex your organization’s payroll is, payroll outsourcing is an opportunity to move to simplify and standardize processes.

If you would like to have a worry-free management of your payroll process, just outsource to a trustable vendor today.

Evoresource specializes in providing Payroll Outsourcing Services. A partner that gives you an edge to manage your organization’s payroll effectively supported by payroll experts. We make payroll outsourcing simple, affordable, and scalable. Enjoy peace of mind when you start using our Payroll Outsourcing services.