Payroll Outsourcing Benefits

Payroll Outsourcing Benefits for Start-ups – a Comprehensive Guide.

India is witnessing an exhilarating growth trajectory when it comes to start-ups. From a lowly position, it has now jumped to the number three position in the world, after the USA and China, for the number of unicorns it has to date. The biggest challenge faced by start-ups today is finding the right talent for core business activities and HR-related services like Payroll processing and Compliance issues.

Payroll processing and HR management are amongst the most critical aspects that demand a high degree of efficiency. Handling these critical aspects internally is not only time-consuming but is also prone to errors that will negatively affect the success and growth of the new venture. The primary aim of the start-up is to focus on their core business activities and all their efforts would be channeled to achieve this. Inevitably, HR-related services like Payroll Processing and Statutory Compliance management take the back seat and this may prove to be a mistake in the long run. It is, therefore, advisable to outsource the payroll process to an external agency as it offers a wide range of benefits that could propel growth. In this article, we delve into the benefits of outsourcing the Payroll process to an established service provider.

In-house Payroll processing and its challenges

Payroll processing and Statutory Compliance are highly complex operations that require a high degree of expertise. Handling employee data and their work performance, and maintaining the contributions towards EPF, ESI, Professional Tax, Labour Welfare Fund, Insurance, and TDS payments requires a team that is highly efficient and always in the know of the changes in rules and regulations. For a start-up, handling these complex and rather critical operations in-house can be a huge burden and highly challenging.

Drain on Valuable time:

Manual processing of the Payroll which includes calculating salaries, deductions, taxes, generating payslips, and filing returns is a time-consuming and tedious process. The valuable time that is spent on these operations can be gainfully spent on core business activities that are critical for growth. Acquiring full-fledged customized Payroll software to handle this process is not also an ideal solution as it may not be able to handle frequent changes in the statutory rules and regulations.

Non-compliance with Statutory Rules and Regulations:

Complying with all the statutory rules and regulations requires in-depth knowledge and the ability to implement changes as and when they occur. Deductions towards EPF, ESI, Professional Tax, and Labour Welfare Fund have to be very accurately maintained to avoid penalties and legal issues. Managing these and TDS calculations is a challenging job and performing these in-house increases the risk of non-compliance due to lack of expertise or oversight.

Lack of Expertise:

During the early stage of growth, start-ups operate with a lean team as they may not have the resources to hire a dedicated HR team possessing specialized payroll expertise. This may lead to a lack of proper working knowledge and understanding of the intricacies of Payroll processing and statutory compliance, thus increasing the risk of errors leading to non-compliance.

Challenges of Scalability:

The growth of a start-up is indicated by the addition of new employees, the onboarding of freelancers, or expansion to new locations. Managing the complex Payroll and statutory requirements in-house during this growth phase can become increasingly difficult. This would necessitate the employment of additional experts who may not be readily available, thus hindering the ability to scale efficiently. An in-house payroll system may not be able to adapt to the changes in rules and regulations thus creating a bottleneck and hindering growth.

Benefits of Outsourcing Payroll and HR Management

The main aim of a start-up is to focus on its core business activity; therefore, outsourcing the Payroll process to an external agency is a prudent financial move that offers multiple benefits. Some of these benefits are:

1.  Cost Saving

Most Start-ups normally begin their journey with limited resources and every rupee that is invested has to be spent with prudence. Cost cutting is a wise and effective move, and one decision that would help in cost saving is outsourcing the Payroll process. In doing so, you can significantly reduce operational costs by eliminating the need to maintain an in-house payroll department. Instead of hiring and training employees to specialize in payroll processing, investing in expensive software and hardware, or spending on regular updates, start-ups can outsource payroll to experienced service providers to achieve the task at a fraction of the cost. This will enable the start-ups to strategically allocate their financial resources toward product development and marketing activities to propel growth.

2.  Efficient Time management

Efficient management of time is essential for growth. By outsourcing the payroll process, start-ups can free valuable time. Payroll processing is a complex and time-consuming operation that requires meticulous attention to detail. By outsourcing this process you will be able to streamline the entire operation, which in turn will enhance productivity.

3.  Statutory Compliance risks

Being compliant with all the statutory rules and regulations is vital for the growth and success of the start-up. These rules and regulations are prone to frequent changes and it is important that companies keep themselves abreast of all such changes. By outsourcing Payroll processing you can avoid these pitfalls as the service provider would be fully equipped to take care of such issues, thus keeping the company fully compliant, always.

4.  Scalability

As the start-up grows, there will be an increase in the number of employees and the number of locations where the company operates. This will increase the complexity of payroll processing. An in-house payroll system may struggle to adapt to these changes resulting in inefficient handling of the payroll that will spoil the reputation of the company and curtail its growth. However, by outsourcing the process to an experienced service provider, you will be able to adapt to the increasing needs thus ensuring seamless scalability without compromising on accuracy.

5.  Data Security and Confidentiality

Employee data is vital and sensitive data that has to be maintained with a high degree of security and confidentiality. Start-ups must prioritize data security to protect the privacy of their employees and take full responsibility for its security and confidentiality. When this operation is performed in-house there is a greater chance of this vital data being tampered with. This can be fully avoided when you outsource as experienced service providers employ robust security measures like data encryption, firewalls, and efficient access controls to safeguard this vital and sensitive data.

6.  Access to Advanced Technology

Service Providers utilize cutting-edge technology to handle the Payroll process. With their ability to upgrade the system in tune with the growing technology, they will be able to provide their clients access to highly sophisticated systems that enhance accuracy and efficiency, thus drastically reducing the likelihood of costly errors.

7.  Frees the HR team

When you outsource payroll, you are actually freeing your HR team from a mundane task and allowing them to focus on core business activities. The complexity of payroll processing and statutory requirements would impose huge pressure on the HR team. This can be fully avoided by outsourcing the payroll and this enables the start-up to achieve its target smoothly.

How to choose your Service Provider?

Choosing the right Service Provider to handle your Payroll and HR Management is vital as any mistake would adversely affect your business growth. Some of the important points that you have to consider while choosing a service provider are provided below:

Access your Business needs

Make a full assessment of your requirements so that you are aware of the features relevant to your needs. Your budget for payroll service will depend on the outcome of this assessment.

Type of Outsourcer you require

The whole idea behind outsourcing Payroll and HR management is to fully automate and integrate the system so that the entire process is streamlined and can be handled without the usual stress that comes with the process. A managed payroll system runs your payroll accurately and on time, calculates the deductions towards EPF, ESI, PF, and LWF, calculates the taxes, and generates the Payslips. On the other hand, a fully outsourced module takes care of every aspect of payroll as mentioned above, but also supports your employees with all their payroll needs. You have to make the choice.

Integration of Modules

If you are looking for total integration, then you have to choose a service provider that supports a payroll module that integrates with the accounting module. This can fully automate both your accounting module and payroll module thereby improving functionality and enhancing the working of the business.


Pricing is an important factor when you choose the service provider. The cost of service varies in accordance with the features they offer. Most payroll service providers charge a flat rate every month or for a pay period. Choose what is suitable for you.


Payroll processing is subject to local laws and these rules and regulations may vary from state to state. It is, therefore, essential to assess whether the service provider is capable of complying with all relevant rules and regulations. Find out whether the provider has a thorough understanding of the country’s tax laws, labor laws, and other laws. Contact other businesses that have used the services of the outsourcer to get an idea of the level of compliance they maintain.

24/7 Support

When choosing a payroll service provider, it is essential that you take into account the kind of customer support and other services that they offer. Look for providers that offer support 24/7, and have dedicated personnel to support and train.


Your business may grow over time, and it is essential that you choose a service provider that can scale according to the changing needs. Look for a service provider that offers scalability with the ability to customize as per the changing needs of your business.


Every start-up has to pay their employees consistently on time. For this to happen, the payroll module has to work accurately and consistently. If the payroll is managed in-house this process is going to take a lot of time and effort. Even if you generate the payslips without errors, handling them in-house may not be the most efficient way to use your time and money.

However, outsourcing the Payroll process and Statutory Compliance requirements to a service provider can provide significant advantages as it offers cost savings, efficient time management, full compliance, data security and confidentiality, scalability, and access to high-end technology. By outsourcing to an experienced service provider, start-ups focus on their core business activities, drive innovation, and achieve sustainable growth and success. Simply put, payroll outsourcing is a vibrant financial move that allows start-ups to blossom in today’s competitive market.

GetifyHR is a leading outsourcer of Payroll processing and HR Management in the country. We have assisted clients across the country to streamline the Payroll process and achieve full compliance with all statutory rules and regulations. As a start-up, you would be in a position to efficiently and accurately handle all your Payroll and Statutory Compliance requirements by associating with us. We assure you of a smooth and hassle-free journey towards growth.

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