5 Key factors to consider while selecting a best payroll outsourcing vendor

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Thinking of outsourcing payroll activities of your business?

Outsourcing the payroll process has gotten perhaps the most well-known choices taken by SMEs nowadays. Increasing number of businesses are no more in a mood to handle headache of tip to toe payroll activities which involves gigantic amount of micromanagement.

What is Payroll Outsourcing?

‘Payroll Outsourcing’ is a process where an organization assigns complete payroll responsibility to the third party who are experts in this payroll.

Payroll acquires major role in running business hence it is not easy to pick professional payroll outsourcing partner who is compatible and can handle end-to-end complete payroll processing without any error. Business consultants nowadays also favour outsourcing the payroll as it maintains the accuracy and save money.

What are the benefits of Payroll Outsourcing?

Many businesses prefer to manage their payroll functions manually through excel sheets and book keeping. Excel sheets is a good idea to manage other area of business but not payroll. Payroll needs expertise, it’s more than just calculations. This is why businesses are now moving to outsourcing partners rather than struggling alone. Here are a few benefits of payroll outsourcing:

  • Time Saving
  • Cost Cutting
  • Increased Productivity
  • Accuracy in Payroll
  • Enhanced Data Security
  • No risk of Penalties
  • Team of experts

There are enormous benefits to talk about outsourcing payroll, but, on the same time it’s really difficult to pick the perfect vendor for your business.

Here’s the list of important factors you must consider while selecting the outsourcing partner for you Payroll Processing;
  1. Payroll administration and processing cost: Payroll is an investment whether done inhouse or by third party. You must analyse your actual and expected budget in payroll processing including administration cost. The ultimate objective of outsourcing is to maximize efficiency and save money. You must check about hidden charges and other costs.
  2. Data Security Protocols: Ensure the safety of your data and privacy. Payroll is directly related to employee remuneration and data is backbone of your business processes. Any type of data leakage can cost you big. Payroll processing is a complex and intensive business operation. Even with oldest employees there is always a risk of data privacy. In addition to backup, server locations, quality of systems etc matters a lot.
  3. Dedicated round the clock support: You must choose a company which has experts, has goodwill in the market and has stability in their planning. Appointing payroll vendor should ideally be one-time activity and not a continuous process. You should pick a vendor which strong support system which can be there for your anytime.
  4. Accuracy and Error-free Payroll Processing: In-house Payroll Processing is time consuming Keeping track of benefit deductions, garnishments, new hires and terminations, paid time off as well as federal and state regulation changes is not at all smooth. When outsourcing vendor gives accurate results and an error-free payroll, your employees can concentrate on their core strategic tasks which can push your business ahead.


  1. Add-on services:  Check about add-on services such as; consultation, guidance, and timely updates on government rule changes and amendments. You and your managers might not have time to research on constantly changing regulations, rates and government forms. You can get an advantage from your outsourcing payroll partner as they carry expertise in this area and never miss anything.


Conclusion: Outsourcing Payroll to a professional expert unburdens you from agonizing over tedious time-consuming tasks which require 100% correctness. It also frees up your HR department’s time which can be utilized for core functions which are strategically more important for your business. Strategic business planning is the reason organizations are now taking such bold but important decisions of outsourcing. It is really a high time to understand the real value of resource management.


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