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Things to Consider When Outsourcing Payroll

by: Sidney Liquigan

Monday, October 30, 2017 |

Startups and SMEs tend to juggle tasks to keep the business growing. To avoid this, the most ideal and practical solution is to outsource back-office functions so you can focus on core business activities.

One of the tasks worth outsourcing is payroll. It is a crucial and time-sensitive task that must be done correctly. It is also time-consuming and can take your focus away from higher level tasks such as improving customer service and increasing your bottom line if you choose to handle it or delegate it to your small in-house team.

Finding the right payroll outsourcing provider

If you're looking into outsourcing your payroll to a third-party provider, here are some things to consider to help you make a decision.


When you search for the right payroll outsourcing provider for your business, getting to know each of them will help you decide which one to choose. Read reviews, feedback, testimonials, and other information on the company available to know if they are reputable and competent, and have the right skill set you require.


Outsourcing your payroll operation will no doubt save you money. To know how much you can save by outsourcing payroll, identify the hours your team dedicates to payroll operation then calculate how much you are spending on those tasks. Compare the amount to the outsourced services offered by third-party providers. You will be surprised by how much more money you could have spent on core business activities instead.


One of the concerns when outsourcing business functions involving data management is if the outsourcing company can maintain the accuracy of data. Especially for employee payroll, errors and inaccuracies can put your business at risk. But what's good about outsourcing is that you will be delegating to specialized experts, ensuring dedication and accuracy.


When you delegate payroll tasks to your employees and things go wrong, you wouldn't be able to seek financial restitution – something you can get from outsourcing companies if they committed payroll errors. Furthermore, since you hired an offshore team dedicated solely to handling your payroll operation, things will get fixed quickly and efficiently. If you are unhappy with the service, it is also easier to switch to another provider than replace your employee. Make sure that these things are included in the agreement before signing a contract with your chosen payroll outsourcing provider.


If your business setup involves hiring seasonal employees and freelancers, you would need flexible solutions. Payroll outsourcing providers have the expertise, technologies, and resources to adjust to your varying needs. Look for a provider that offers flexible services.

Ultimately, it is ideal to have a checklist of the above considerations along with your other requirements and expectations and compare each payroll outsourcing provider to find the right one for you.

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