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Everything You Want To Know About Payroll Outsourcing Services

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Published On: | Administrator

What is Payroll Outsourcing? 

A payroll is a term which is defined as the process of payment of salaries to a company’s employees and then keeping a record of these salaries. This is actually managed by the human resource department of a company. In a company different department such as payroll, HR, and finance work together to manage the payroll service. But, today, payroll software is used as an effortless and cheap service to handle the complexities. 

The mechanism of payroll outsourcing in a company

The following steps are involved in payroll outsourcing: -

  1. Preparation of a list of employees 

  2. Standard payroll policy by the business 

  3. Gathering of employee inputs

  4. Checking the validity of the employee inputs that 

  5. Calculation of the payroll by a payroll software or a bookkeeper

  6. Disbursing employee salaries

  7. Statutory deductions of PF (Provident Fund), TDS (Tax Deducted at Source), ESI (Employee’s State Insurance) and PT (Professional Tax)

  8. Payslip distribution to employees with their tax computation sheets. 

What are the different types of Payroll outsourcing

  1. Internally Managed Payroll Systems 

  2. Professionally Managed Payroll Systems 

  3. Payroll Services Managed by Payroll System Agencies

  4. Software Managed Payroll Systems

The benefits of payroll services and what are the challenges faced while payroll management

Benefits that payroll services will provide companies: -

  1. Payroll outsourcing help to overcome common business challenges

  2. Payroll services help a company to be flexible

  3. Payroll services support recruiting procedures and benefits provisions. 

Challenges that company face while handling payrolls: -

  1. Keep up with the legal framework while disbursing employee salaries. 

  2. Complications related to spreadsheets and relying on manual setup. 

  3. Protecting the confidentiality of employee’s sensitive data

  4. Lack of flexibility in the payroll system due to manual/traditional processing

Features that companies should consider while choosing a payroll software

Payroll software programs are very much in handy in terms of handling complex and time-consuming tasks like Disbursing employee salaries, Payslip distribution to each and every employee. These are fast and come with no additional monthly costs and also a smaller number of errors. 

  1. Features are fit for the business (small or large business)

  2. Easy to use software/User friendly features 

  3. Automatic payroll submission

  4. Affordability 

  5. Good setup 

  6. Document storage feature (Main feature to consider)

  7. 24/7 support

  8. No hidden fees for setup or any other aspect 


Payroll outsourcing is a very important process that includes various methods of gathering and processing employees’ confidential information like PAN, ADHAAR and other sensitive information to make disburse the salaries, do statutory deductions and distribute payslips to individual employees. There are benefits and challenges of payroll outsourcing. There are different types of payroll outsourcing. Payroll software is the most important tool that comes in handy in terms of handling complex and time-consuming tasks.

Contact us at for the outsourced payroll processing services.