What is Payroll Outsourcing?

What is payroll?

Payroll of a company refers to the payment of employees. It encompasses the sum of all the financial records of salaries for an employee, bonuses, taxes as well as deductions. From an accounting perspective, a payroll refers to the amount paid to the employees for the services rendered by them for a certain period of time.


What is payroll outsourcing?

Payroll outsourcing in a business means engaging an external party to handle all payroll related activities. Outsourcing of payroll functions is generally done to reduce cost and save time required to deal with financial tasks related to a payroll. Hiring an external firm to handle payroll activities means a business organization can do away with the need to hire and train a large in-house payroll staff, buy appropriate software package for payroll functions and remain constantly updated about complicated tax regulations.

Outsourcing of payroll activities is beneficial for all kinds of businesses, regardless of the organization having a large payroll or a mid-range or small payroll.

What are the activities covered under payroll outsourcing?

Payroll outsourcing generally includes all activities related to payroll processing and other payroll-related functions. Payroll processing includes several activities like maintaining employee records, calculating employee salary and wages, computing and adding bonuses, distributing payroll, generating payroll related reports and complying with the taxation laws of the government.

Predicted growth of payroll outsourcing market in India

The global payroll solutions market is expanding at a very good pace. It is predicted that the global market for payroll outsourcing will reach USD 162 billion by the end of 2015. India being a big player in the outsourcing market is also following the global trend.

Payroll outsourcing is a major player in the Indian outsourcing market. With the continuous growth in the HR outsourcing industry in India, the payroll solutions industry is also expanding in a big way. According to a recent report the Indian payroll outsourcing market will witness a marked growth in the coming years. The market is predicted to increase by almost 50 per cent in the next five years.

Companies and organizations today are looking for time saving and cost effective measures to run their business smoothly. They are opting for cost reduction at various levels and focusing on outsourcing certain jobs that will provide them with the opportunity to focus on core issues of the business single-mindedly. Payroll is one such area that is generally outsourced to reduce the complexities of having to deal with payroll related activities in-house.

Another thing to note is that with the growth of the payroll solution market in India new players are entering the arena. This will mean an increase in competition, which will result in improvement in quality of outsourced payroll activities.

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