Pros and Cons of Payroll Outsourcing

Payroll outsourcing means outsourcing your payroll activities to a payroll expert organization and you are free to focus on your business development needs instead of spending your valuable time in administration, HR & payroll functions which are time-consuming but at the same time, this is very sensitive.

Everything has its Pros & Cons and the same goes for payroll outsourcing. It would be great if you think of them in detail before outsourcing the payroll. Outsourcing is the best solution for small & medium size organisations as it will be too expensive to hire the payroll expert for small organisations.

Pros of Payroll Outsourcing:

1. The best solution for small organisations-
   When you are a small or medium-sized organisation, you can outsource your payroll and focus on business development & profit-generating activities and minimize the time-consuming tasks rather than hiring a full-time staff.
2. Save the money-
   You can save time and money on hiring payroll expertise in house, software cost, computer system costs and training a new employee and again. Also, there is no dependency on the single resource in the organization
3. Expertise in tax regulation changes-
   You get expert advice for your payroll requirements. Payroll outsourcing team is always up to date with knowledge & information
4. Stay compliant-
   Outsourcing companies always stay updated with compliance and you stay away from notifications & penalties.  You get time to time updates from them for changes.
5. Meeting SLAs & deadlines avoiding penalties–
   Outsourcing companies have expert teams that are trained to meeting SLA’s & deadlines. In case they miss the deadline due to issues at their end, it’s their responsibility to pay to the penalties.
6. One place for all activities–
   Outsourcing is a destination for all compliances e.g PAYE, Benefits in Kind, VAT, CS & Corporation Tax, Self-Assessment.  You don’t have to create a big team with heavy overheads for all these activities in-house.

Cons of Payroll Outsourcing:

1. Payroll last-minute changes–
   There is one constraint that last-minute changes are difficult to manage in payroll outsourcing due to time difference and sometimes adjustments are carried forward to the next pay period.
2. Data security–
   Payroll outsourcing means sharing the confidential & sensitive information with a third party and mishandling can be done for the information. There should be always an agreement and consequences for mishandling the data and Outsourcing organization should be GDPR compliant. So you must check whether the outsourcing company is GDPR Compliant or not?  
3. Extra cost for payroll amendments-
   There is always a contract in payroll and they do not attend a number of payroll amendments. There are fixed numbers and after that companies start charging for revisions which are again a burden on the business.

Hope this article about Pros and Cons of Payroll Outsourcing helped you understand