If you doubt whether or not to outsource your company’s payroll for fear of security risks: we will change your mind. Today’s technology not only helps save time and money, but also protects the confidentiality of all sensitive information contained in payrolls.
Today I will guide you through – how to manage payroll outsourcing efficiently and hassle-free.
Table of Contents
When you should outsource payroll management?
For a long time, payroll management has been considered a strategic process for companies and managers and managers have been reluctant to outsource it. At the end of the 80s, however, organizations began to be aware that outsourcing payroll preparation had a series of advantages, such as lightening the structure of companies.
Any company, regardless of its size, may find itself in a situation where it is advisable to outsource payroll. For example, the following assumptions can be made:
- Companies that are growing by hiring more people and that want to outsource all payroll management sub processes.
- Small or recently created companies that need to focus on their business and have an effective payroll management process that complies with the law.
- Organizations that wish to expand internationally and need local payroll management.
- Companies that merge with others or acquire others in which there is no payroll outsourcing.
What to outsource regarding payroll management?
The company’s payroll management process can be totally or partially outsourced, that is, the external third party hired to manage payroll can perform all or some of the payroll outsourcing subprocesses, for example:
- Compilation of personal information of each employee to prepare the payroll.
- Calculation of all payroll concepts and preparation of the same.
- Configuration of the payroll payment method.
- Management of the entry into the Tax Agency of the withholdings made on the payrolls.
- Preparation and sending of withholding certificates at the end of the year.
Types of Payroll outsourcing
Payroll outsourcing can be of various types:
- Total outsourcing in favor of a third party: In which a third party manages the payroll and all the processes associated with it.
- Hybrid model: In this case, part of the processes related to payroll is managed by the company and another part is carried out by an external third party.
Advantages of payroll outsourcing
Payroll outsourcing allows you to save financial and personal resources, but it also provides other advantages such as the following:
The use of Artificial Intelligence and robotic process automation (RPA) contribute to reducing errors and reducing the costs of payroll preparation by external third parties, thus reducing the return on investment of the hiring organization. Payroll management increases.
Streamlining decision-making processes
According to the 2020 Global State of Enterprise Analytics report, 97% of real-time business decisions are not based on data.
Making quick decisions based on reliable and up-to-date data is possible with the reports that can be prepared by payroll management software. Deciding in time can mean that your company gets ahead of its competitors and does not make mistakes.
Security and confidentiality in data processing
Payroll management by an outsourcing company requires the transmission and processing of confidential data. The technology used in payroll outsourcing guarantees the security and protection of information by establishing access levels by user groups or by performing security audits.
Three out of four directors, managers and middle managers surveyed (75.15%) affirm that the quality of the processes positively affects the improvement of productivity since both aspects are closely linked. The process of preparing and managing payroll is one of the most important in companies and its automation improves the productivity of the people who are part of the people management department and the work environment of the organization.
You can read the advantages in detail.
How to manage payroll outsourcing step by step
If you have decided to outsource payroll management, you must follow a process that may have the following steps:
Analyze the situation of the company and the tasks you want to outsource in relation to payroll
Before starting the process of hiring a company for payroll management, it is necessary to analyze the situation of the organization and see what process is followed to prepare payrolls and which people and departments perform each task. Once you have determined all the tasks that are performed in relation to payroll, you can make a list and determine which ones you want to outsource. It is advisable that you opt for repetitive tasks that require the investment of a large amount of time.
It is also important that in this first phase you set objectives to be able to measure and know if you have achieved them.
Choose the right payroll outsourcing provider
This is one of the most delicate steps. The elements that you can take into account when choosing a provider are the following:
- Constant updating to adapt to changes in tax and labor regulations.
- Possibility of preparing reports that facilitate the company’s decision-making processes.
- Centralization of the entire process and information in a single software.
- Possibility of creating a collaborative payroll process.
Formalizing it in writing through a contract with the payroll outsourcing service provider is essential to regulate:
What does the provision of services consist of and what tasks will the payroll outsourcing company perform?
- The duration of the provision of services, possible extensions and the power to withdraw from the contract with prior notice.
- The price of the services and the method of payment.
- What happens in case of non-compliance by the service provider company.
- Confidentiality regarding the information transmitted to the supplier and security measures that will be implemented.
Start of service provision
To begin providing the payroll outsourcing service, personal information about the employees, the forms of payroll payment, the deadlines in which payment occurs and other aspects must be transmitted. It is common that during the first months adjustments must be made for the process to work correctly.
Preparation of reports
The supplier will prepare reports periodically to inform about the actions carried out and about: the expenses incurred by the company’s staff, what accessories are spent the most on or how the team’s payroll is evolving. This will allow you to control what is spent in real time and make agile decisions.
To know if you are obtaining the benefits you expected from payroll outsourcing, you will have to compare the objectives you have initially set with the results you obtain. To do this you will have to choose certain parameters to measure and obtain the ROI. You may have to make modifications over time to adapt to current circumstances.
Outsourcing of payroll means the streamlining of a strategic process of any company, the possibility of making quick decisions and the happiness of the entire team. It is, without a doubt, a service that provides added value to any company.
Outsource Payroll to PITCS
PITCS is always aware of all the information necessary for correct execution when preparing and managing all information about your payroll. With PITCS Payroll outsourcing service, there is no need to modify Excel data and re-enter the information into your payroll provider’s platform.
We take all the necessary steps to provide you with peace of mind and error free payroll solution with following steps:
- The contracts generated from new employees who have been registered on the platform.
- Contracts that have ended and have been canceled in the software.
- Personal data of workers and any changes communicate changes in ID, addresses or other information.
- Modifications to employee contracts regarding salary or type of contract; which are factors that can affect when calculating payrolls.
- Supplements, variables, bonuses, compensation variables, etc. In addition, these supplements may be defined for a specific period.
PITCS offers payroll management in Bangalore, Kolkata, Mumbai, Delhi, Gurgaon and other major cities in India.
Conclusion: How to manage payroll outsourcing
Finally, with PITCS you have control of employee absences and vacations, which have an impact on payroll. We also take care of the production hours that have been recorded on the platform that can be used to calculate work hours.