Outsourcing Payroll Guide

Outsourcing Payroll Guide
Article by Zarah Ariola
Last Updated: May 25, 2024

If you’re just starting out in business, you might not have realized the role HR and payroll specialists play in your daily operations – especially for your team’s monthly salary.

This is doubly challenging to the department as your business grows, having to search for, hire, and manage more employees as time goes on. With 25% of small businesses still managing their finances and accounting manually, this takes longer and is prone to human error. Moreover, they work on several operations and strategies at a time alongside leadership to support people, culture, and business growth.

If you’ve been thinking of outsourcing payroll, learn more about it and how it can serve your company as it develops.

What Is Payroll Outsourcing?

Payroll outsourcing is hiring a third-party service provider to manage accounting for your staff’s salary and benefits. It’s an option available to small and large businesses, particularly when they’ve experienced challenges in managing it on their own.

Generally, your focus in starting a business is the solutions you want to offer your customers. You might have even started out as a self-employed entrepreneur. Managing a team and their salary would have been the least of your worries, so, understandably, you wouldn’t be familiar with how to do payroll.

With this, you’re certainly not expected to become an overnight expert on the payroll management system. Over time, you can build up a team dedicated to your HR and finance operations or partner with a reliable payroll outsourcing agency. For companies considering international growth or global expansion, there are also employer of record services you can work with to assist your business.

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The Benefits of Outsourcing Payroll

Let’s discuss business: How do you integrate an outsourced payroll service into your company workflow? What basic functions is the average payroll platform capable of? What features should you look for in your search for the right fit?

Learn more about how payroll outsourcing works to discover how you can shift your processes to include it. Payroll service providers typically offer the following tools on their platform:

1. Integrated Timekeeping and Attendance

An integral part of the outsourced payroll platforms is the timekeeping feature, which makes automating tasks possible. Employees can also schedule their leave requests from the application, simplifying the process of emailing specific managers and manually checking an Excel sheet of who would be on leave.

From the main page, you would typically see a time recorder, buttons to time in or out, a calendar to see which days you’ve attended work or taken off, and how many PTOs you have left. This is a quick and easy way to see an overview of your work attendance.

2. Automated Accounting

As the main feature you’re looking to use on a payroll service, make sure you’re comfortable with the look and feel of the platform.

Thanks to your attendance details, the outsourced platform can work as intended and automate payout, tax, and other benefits computations. This streamlines multiple tasks and saves your HR and finance department a lot of time processing each employee’s salary for the month – a benefit both small and large businesses can enjoy.

3. Cloud-Based Access for Employees

This is an excellent feature for teams working from home, especially for companies with an international workforce. An online platform that can be accessed from the office or on the go makes the process faster and more seamless for everyone. Managers can access employee attendance records. Employees can update their information and access it as needed.

4. All-Inclusive Client Support

To stand out among competitors, service providers will integrate as many handy features as possible centered on automating or assisting with minor tasks.

Many platforms make your government dues and fees easier to track and manage thanks to the automated computation from payroll platforms. Receive email notifications of payment amounts and deadline reminders so you won’t incur interest due to late payments. Some providers offer tax and payroll report assistance, benefits claims, and unemployment claims.

Payroll outsourcing platforms also offer 24/7 support for queries and troubleshooting concerns through voice and chat support. This means they can serve clients from around the world and provide prompt assistance.

The Benefits of Outsourcing Payroll

As mentioned above, with a quarter of small businesses manually doing their books, they are inevitably susceptible to human error.

Conversely, 45% of small businesses outsource their payroll processes. This shows that many organizations have seen and experienced the advantages of outsourcing their salary operations. Even large corporations can benefit from third-party payroll services as this can help decrease their overhead costs.

Why should you outsource payroll processes?

  1. Outsourcing Payroll Saves Time
  2. Comprehensive Payroll Services
  3. Payroll Outsourcing is Safe and Secure
  4. Affordable Pricing for Payroll Outsourcing

1. Outsourcing Payroll Saves Time

It takes many moving parts to support a business as it grows. It’s impressive that it isn't feasible for everyone when leaders and managers have the proper delegation skills to keep track of different teams and projects at a time.

Partnering with a payroll service provider takes some of the weight off your shoulders. It saves you time and effort formulating plans of action to improve operations, primarily because HR agencies would have established process and productivity tools for a more straightforward approach.

This is also where automation applications come in. While these also need setting up at first, once you’ve arranged all the necessary settings and cataloged the essential details, it’s smoother sailing than doing it manually.

2. Comprehensive Payroll Services

The best payroll services have a comprehensive list of features and tools. This usually comprises timesheets, attendance, leave filing, recordkeeping, salary and tax computation, and employee management, all in one platform.

The best feature of all is the convenience of using the platform from any device. Employees can select their preferred method once it’s time to claim a payout.

This can also save you time since you won’t have to switch between multiple applications to do one task. Of course, working with a payroll service provider means not having to do it yourself.

3. Payroll Outsourcing is Safe and Secure

While setting tools up and implementing their use can take time, automating tasks decreases the chances of mistakes down the road. Moreover, any reliable application should have established user security measures and privacy policies.

That said, selecting the provider with the most ideal protection features for your team’s information is vital. This is also encouraging for your staff because they can freely use and access the payroll system as much as they need, and they’ll have a secure transaction each time.

4. Affordable Pricing for Payroll Outsourcing

With all these functions available in payroll outsourcing platforms, affordability is a considerable advantage over searching for, hiring, training, and establishing internal processes. Of course, accomplishing all these within your company is notable; lowering costs is also a priority for your business.

Find the ideal payroll outsourcing tool to match your needs with all the features you require within the budget you’ve allotted.

Get connected with the right payroll agency for your project.

Disadvantages of Outsourcing Payroll

While working with payroll outsourcing companies has its benefits, there are also some potential drawbacks. Even though they are negligent, you should consider them as well.

Less Control Over Your Data

Even though employee payroll data is mostly hard-to-process, chunky, and bulk data that’s challenging to form into intelligible information, it’s still your data. If you hand it over to a payroll outsourcing company, you lose at least some or even all control over said data, no matter that you don’t have the burden of dealing with it.

Often, if you want to manage or check employee payroll data, it may lead to interferences with the service provider’s internal tasks. Still, in most cases, you will be able to monitor everything, but if specific changes need to be made, your service provider will most likely have to make them.

Possible Paycheck Delays

The process of finding an adequate payroll provider and getting you onboarded with them can be lengthy. You must be prepared for several meetings to coordinate the process and update them on the essentials.

Because most of the communication will probably happen through email, there can be response delays, which may also interfere with issuing paychecks. Providers will usually send paychecks on predetermined dates according to their convenience and not yours.

You May Also Pay for Unwanted Services

When working with a payroll outsourcing company, you can pick the plan and pricing that suits your needs. Still, most of these plans will ultimately have one or two features that you won’t need to take care of basic payroll processes. This means that you might end up signing up for more than you effectively need.

That said you should always assess plans and pricing, research the market, and opt for the best company that aligns with your budget.

Things To Consider When You Outsource Payroll

So, what should you look out for when browsing for the appropriate payroll service provider? Below are some points to keep in mind on how to choose a provider:

Similar to when hiring a new team member, determine if the potential payroll outsourcing meets your requirements, and vice versa.

Consider how your team is set up: If you’re an international company, outsource payroll to a service that covers a global scale rather than a limited number of countries.

Find feedback from their previous clients and review their track record. These can also confirm if the platform has the features you’re looking for.

See if the platform has a free trial period and evaluate how well the team interacts with it in the time available. If it’s amenable to the overall work process, consider permanently integrating it into your routine.

Best Payroll Outsourcing Companies

Before wrapping it up, here are our top picks for the best payroll outsourcing companies.

DevsData Tech Talent

DevsData Tech Talent has been servicing “demanding clients” since 2016 and has delivered over 100 successful projects with over 80 clients.

The company specializes in challenging projects, and in addition to payroll outsourcing, it also handles web and mobile app development, data analytics, big data, and graphic design solutions.

DevsData Tech Talent employs highly skilled engineers and expert senior contractors, ensuring premium quality and offering full-cycle product design and development, cloud adoption, and engineering.

Better QA

Better QA is all about promoting quality software globally. With several years of experience, the company’s experts help their clients by delivering top-notch services that minimize errors and maximize efficiency.

It provides ISTQB-trained QA engineers, with a QA project manager assigned to each project. Their initial approach covers over 100 checkpoints, starting with reviewing the existing documentation, exploratory testing, integrating and QA team, and establishing a testing environment.


GOIGI is on a mission to help clients undergo digital transformation in the ever-evolving business landscape. The company aims to empower entrepreneurs with comprehensive industry research and market competition intelligence.

GOIGI offers BPO and recruitment process outsourcing to help companies streamline their operations and find the right talent to help them grow. The company has achieved global recognition with a 100% project delivery success model powered by a large talent pool of experts.


IntelligentBee is a payroll service provider with over 14 years of experience offering solutions to small businesses, startups, and large enterprises. The company is active in over 20 countries, helping clients with the latest tools and keeping them up to date with their processes.

IntellgentBee offers the following expertise:

  • Data entry and cleaning
  • Omnichannel customer support
  • BPO services
  • Back-office services

Key Takeaways to Outsourcing the Payroll Process

Outsourcing the payroll process isn’t a last resort. Though businesses can opt to partner with them following challenges in managing the HR and accounting process by themselves, keep in mind that the nature of business is to focus on your strengths. Networking and collaborating with industry experts can help you learn new approaches and techniques, similar to finding a mentor and gaining an inside look into their expertise.

To summarize, what benefits does partnering with a payroll outsourcing service bring to your company?

  • Simplify complex payroll processes – Providers have integrated all the valuable tools to help polish your workflow.
  • Automation of most payroll tasks – The essential functions of your process can be streamlined through automation programs and incorporating timekeeping, attendance, and leave requests into one platform.
  • Partner with the payroll professionals – Learn tried and tested techniques from the experts, or better yet, establish a partnership that benefits both parties as you focus on developing your businesses accordingly.

Outsourcing Payroll FAQs

How does payroll outsourcing work?

This is a strategic business approach in which a business delegates all or some payroll tasks to a service provider. The provider and the company set up a payroll system, the business provides the necessary employee data, and the outsourcing partner processes the payroll. This involves calculating taxes, wages, and deductions, all in compliance with pertaining legal regulations.

Once all of this is processed, the provider distributes the payments via various channels and handles tax filing, compliance, and report generation for analysis.

Why should you outsource your payroll?

Outsourcing payroll processes can help businesses save time and money. It can also help business owners streamline their payroll processes and ensure all related processes comply with regulations.

By relieving businesses from the burden of handling the complexities of payroll processing, they gain more time to focus on growing their operations. Outsourcing payroll services also guarantees easier scalability and flexibility.

What are the pros and cons of outsourcing payroll?

Outsourcing payroll saves both time and money. Service providers will most often offer comprehensive solutions, including attendance tools, timesheets, recordkeeping, leave filing, tax computation, employee management, and much more, in a single platform.

However, it also means that businesses have limited control over their payroll data. Other challenges may include delayed onboarding process and employee paychecks. Businesses may also find themselves paying for features that they’re not utilizing.

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