Outsourcing certain business functions have become quite common these days. This is because of the advancement of various technologies and the evolution of work cultures which is still new for some. In that case, companies prefer to outsource certain functions to professionals rather than hiring and training people. Payroll outsourcing is one such function.
Believe it or not, handling and managing employees' salaries is a primary business function. It is directly related to the welfare of your employees because of this; it becomes one of the most important aspects of running a business effectively.
In today’s digital age, it is easy for anyone to go public with their issues. There are many platforms where employees can rate their companies in terms of company culture, growth, and salary structures.
A good review of your salary disbursements can save you good talent. What if an employee you want to hire doesn’t join your company just because he or she heard somewhere that the company delays payments of salaries?
To save themselves from this embarrassment by organizing the whole salary distribution and employee benefit allocation, companies prefer payroll outsourcing, for which they hire professional firms like MyTasker.
How many companies use payroll outsourcing to keep their employees happy?
A whopping 73% in America alone. Yes! According to a recent survey done by Deloitte, 73% of companies outsource their payroll operations. And they have been doing it for a very long time. At least 58% of the companies that outsource payroll operations have been doing it for five years.
So, be with us as in this blog, you will learn if you need payroll outsourcing or not, what are the benefits of payroll outsourcing and points to keep in mind while payroll outsourcing.
What Is Payroll Outsourcing?
As the term suggests, payroll outsourcing is outsourcing the payments of the salaries of your employees to an outside firm. It is when you engage a third party to manage your employees' salaries and other financial benefits.
So, the agency you hire carries out all financial transactions between you and your employees, including salaries, bonuses, reimbursements and tax deductions, employee benefits, if any, and much more.
But why do companies outsource their payroll operations when it is crucial for their reputation and growth?
The answer is simple. It saves them an ample amount of time which they can focus on growing their business. Whenever a company outsources its payroll operations, it helps it carry out a perfect plan for effectively distributing salaries.
They also help simplify the complex tax processes worldwide, so you don’t have to worry about keeping yourself updated with global taxation policies.
Who Should Outsource Payroll?
Should you outsource your payroll operations, or can you handle it yourself?
If you have the same question in mind, keep reading.
Payroll outsourcing can be done by companies that need a proper finance team arrangement or companies that need to be more significant to have a good administration team.
Similarly, firms that operate remotely. These days, companies prefer to hire remote employees. It helps them get access to international talent. But it means they also need a system to calculate and distribute salaries to their international employees. There outsourcing this function can help.
Companies that want accurate data to calculate their employees' performance can outsource payroll operations.
Big companies are also outsourcing payroll operations and reaping their benefits. According to Deloitte’s survey, 81% of the larger organizations with more than 5,000 employees use third-party payroll provider performance.
Eight Benefits of Payroll Outsourcing
Outsourcing payroll operations can offer immense benefits. Below are the eight benefits of the same. Have a look.
1. Saves Time & Money
Isn’t it obvious?
Calculating and distributing salaries and employee benefits every week, every month, or every year is a time taking task. It may seem like anyone can do it, but it’s not true. Only people with enough financial and legal knowledge are capable of doing it.
People are specially hired to perform this function. So, it costs a company time and money. And payroll outsourcing is not that expensive. When you outsource, you save both time and money.
2. Work Well for Small As Well As Large Firms
Yes! You can outsource payroll operations if you are a start-up with 100-200 employees. It will save you time and energy, which you can apply to your core areas.
Similarly, big firms with thousands of employees generally need payroll outsourcing services because the more significant the number of people, the bigger the risk of making mistakes. So, these payroll outsourcing services make sure that there is no discrepancy in salary distribution.
3. Speed Up the Process
These firms are experienced, expert, and hence fast. They can ensure that the salaries and benefits are released within a stipulated time without delay.
They hire people who are experts in what they do. Therefore, they are faster than the regular employees.
4. Help Maintain Transparency
These firms generally provide you with a portal or system where the employees are supposed to mark their attendance and fill up their details.
Since no inside employee is involved with them, there is no bias. It helps them maintain transparency.
Also, they are generally error-free.
5. Help Maintain Reputation
When the salaries and benefits are released on time without any discrepancies, it keeps the employees happy and happy employees are very unlikely to spread the bad word about your company.
Also, it helps improve the overall employee experience and ensure their welfare. So, employee retention is generally higher. It improves the overall productivity of your business.
6. Adhere To Global Policies
Every country has different taxation policies. What if you have international employees?
These payroll service providers are updated with all the government policies related to reimbursement and amendments. They adhere to these policies and save you from any legal consequences.
One Firm for All Locations
If you have offices across the world, you don’t need to have teams everywhere. Nor do you need to hire different agencies for payroll outsourcing.
One firm can take care of your operations at all your locations.
8. Share Data That Can Be Helpful for Growth
The payroll outsourcing service providers can also help you keep track of the attendance of your employees, as in who is taking how many leaves. Their login and logout timings are also well calculated by these service providers.
It helps you create better plans for your employees and promote their well-being.
Points To Keep in Mind While Outsourcing Payroll Operations
Payroll outsourcing can be very beneficial for your business if done right. So, there are specific points that you need to keep in mind while outsourcing payroll operations. These are:
- Be careful while sharing data: When you outsource payroll operations, you share important data of your employees with them. They can also make out the financial position of the company. So, one needs to be careful and create a system that does not allow them to misuse the data. A legal document is a must.
- Always hire registered firms: When it comes to money, never trust a rookie. Always hire registered professional firms like MyTasker. It is always advised to run background checks before you make a decision.
- Adhere to budget but don’t compromise: It’s true that you will have a budget in mind but don’t hesitate to shell out a few dollars for a trustworthy service provider. Never go for cheap deals, or you might lose it all.
- Always give them updated data: Things change at work. Employees leave, and new employees are hired. Always share the updated data of your employees with the firms.
Summary: Eight Benefits of Payroll Outsourcing That Can Help Your Business Grow
Payroll outsourcing means outsourcing functions like salary disbursement and allocation of employee benefits. It helps a business by saving time and money while promoting employee welfare.
If you also want to do payroll outsourcing and are looking for a trustworthy firm, check out MyTasker for more details.