In-house Payroll versus Outsourced Payroll Services

January 4, 2011

We all have this great fad for comparing things. The more we examine, the better we are supposed to be at our analytical skills, exercised with oh-I-am-out-of-the-world-attitude. Moreover, you also have a boss who always wears his holier than thou attitude, because he believes only in facts, numbers, and charts. Also, he is armed with the magic wand of your next appraisal. So when your organization asks you to give your opinion on the best course to take on outsourcing payroll, here is a handy guide built on facts and empirical data to the boot (even if it looks like a compare-and-contrast-essay from school times) that can make you look equally smart, analytical and ready to take on the next rung in your career ladder.

  • Allows core staff to focus on core business processes. Need more team who are willing to play the assembly-line kind.
  • The vendor takes care of all integrated challenges viz., compliance with taxation and software updates with changing legislation. Will need experts in-house, for these tasks. However, your data volume may not keep them sufficiently occupied, leading to under-employed staff and over-paid experts.
  • Reduced cost as a payroll service provider can optimize on efficiencies of scale. You must build greater checks within the system to ensure that optimization of resources – man and machine are in place.
  • Complete peace of mind as a service provider handles the entire month-on-month routine, year-end tax returns, and insurance. A juggling act that must go on month-on-month with more confusion during year-end.
  • Can build SLAs that will protect you in the event of a payroll legal issue. You have no choice but to face the heat.
  • Data backup is available for a couple of years or even more, per the client’s requirement. Must build large in-house capacities leading to larger CAPex and OPex.
  • Data security can be an area of concern if a technology team does not adequately back the vendor and integrated data centers. In-house options can be much more expensive and may not be the right approach
  • Customer service can be a sore point. Take your time to choose the right service provider with the proper references. For example, service providers like TalentPro have the entire bandwidth of associated services like compliance built into the outsourcing value chain and can be a true-blue outsource payroll partner as you grow. Is bound to be good, because the help-assistant is part of the system.

Finally, close your presentation with the fact that the choice outsourced
payroll services should be made based on total payroll cost per employee per year. This is a significant factor while deciding on in-house payroll vs. outsourced payroll services.

Also, you can walk away with the satisfaction of having done your homework well, this time.

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