Payroll is an integral part of any business, so it’s crucial to get it right. Companies with a flawed or inefficient payroll system may fall into legal issues, fines, and employee dissatisfaction, which can drastically affect productivity. Although running payroll in India can be complex, many companies choose to run their payroll in-house, but at a potentially heavy cost.
Why should you Outsource your Payroll?
Cost Savings
- Reduces expenses associated with maintaining in-house payroll teams, including salaries, training, and infrastructure costs.
Time Efficiency
- Frees up internal resources, allowing businesses to focus on core activities and enhance productivity.
Compliance with Local Laws
- Ensures adherence to Indian employment and tax regulations, minimizing the risk of penalties and errors.
Access to Expertise
- Leverages specialized knowledge of Indian payroll laws and regulations, simplifying complex processes for businesses.
Advanced Technology
- Provides access to automated payroll systems, improving accuracy, efficiency, and reducing manual errors.
Scalability
- Enables businesses to scale payroll operations seamlessly without the need for hiring additional staff.
Risk Reduction
- Minimizes errors in payroll processing, safeguarding businesses against legal and financial risks.
Overcoming Cultural Barriers
- Assists foreign companies in navigating language and cultural differences for smoother operations in India.
Confidentiality and Transparency
- Ensures secure handling of sensitive employee data, mitigating risks of data breaches while maintaining transparency.
What is Payroll Outsourcing?
Payroll Outsourcing is when an organization uses a third-party payroll provider to handle their entire payroll and compliance-related activities. This includes:
1. Generation of certain payroll inputs like loss-of-pay deductions, overtime, arrears, and bonus calculations
2. Processing of payroll inputs to calculate the net salary payable, as well as deductions like Salary TDS, Provident Fund, ESIC, and Professional Tax
3. Filing of TDS and Compliance Returns
4. Generation of Reports and Payslips
5. Audit and Advice related to tax and compliance matters
According to Forbes Advisor Today, more than 70% of the 500 Largest Companies outsource their payroll, and it is no surprise, that a growing proportion of small and mid-sized companies are also following this trend.
What should you look for in a Payroll Vendor?
1. Reputation in the market
The most important aspect to consider while evaluating payroll providers in India is the reputation and trust they build in the market. Companies gain a reputation in the industry by maintaining excellence in all the points below, like timely delivery, accurate processing, years of industry experience, and much more.
2. Cost Control
The cost you pay for outsourcing your payroll to a third-party vendor will be a fraction of the cost you would spend on an entire payroll team in-house. However, comparing various costs across vendors and researching any hidden costs involved can be crucial for deciding on the right vendor for you.
3. Error-free and timely processing
Error-free payroll processing and on-time delivery can reflect positively on the quality of the service given by a payroll provider in India. If possible, it is highly recommended to run a pilot payroll before opting for the service, as it will give you a clear understanding of whether that vendor can fulfill all your requirements or not.
4. Data security
The first thing that comes to our minds when we hear of a cloud-based solution is: where will the data be stored, and is it really secure? You must check for various security certifications (such as ISO-27001) that vendors have under their belts, and also validate the stability and security of their systems.
5. Customized package option
Ideally, it helps if your payroll service provider, is also your HRMS provider, given the need for tight integration between your HRMS and Payroll. Working with a Payroll Provider, who also has its own HRMS, reduces the costs and time spent on integration while being a one-stop solution for all your HR operational requirements.
6. Customer service
After-sales service is an essential component of any solution. Your employee will expect to receive their pay on time every month. It does not matter how you do it or what difficulties you may have to go through, but if your payroll vendor cannot assist you with issues and queries that need immediate attention at the time of running your payroll, you may want to explore other vendors who can provide you with this kind of support.
7. Industry expertise
Payroll outsourcing companies in India operate on efficiency and trust, both of which are obtained from years of experience in the field. Experienced payroll service providers provide you with a strong team of payroll experts who know the ins and outs of the payroll landscape.
8. Compliance filings
Payroll and compliance management go hand in hand, and adhering to all statutory compliances and their filings is a challenge most companies cannot overcome. Non-compliance can lead to heavy penalties. Hiring a separate compliance consultant leads to gaps in the process and requires one more party to deal with. Hence, companies find it more efficient to outsource their compliance to their current payroll service provider.
Now that you know exactly what to look for in a payroll outsourcing solution, let’s check out the Top Payroll Outsourcing Companies in India that exist in the market today.