Payroll is an integral yet critical function of any business operation. While many businesses choose to hire an in-house team for managing it through manual bookkeeping, growing businesses prefer to outsource the function to a team of professionals and manage it through an organized process. In a recent listing by Hurun Global Unicorn, India’s MSE business sector of 21 start-ups is valued at $1 billion.
Pandemic trends for Payroll Outsourcing
India is a growing economy of thriving businesses yet the pandemic Covid-19 has brought the economies to a halt for months across the globe. This sudden global crisis forced corporate think tanks to reevaluate their business strategies. One of the lessons learned by organizations was adapting the outsourcing payroll function to third-party professionals. As per Technavio’s recent study, the Payroll outsourcing market is expected to grow by $5.01 billion at a CAGR of almost 5% during the 2020-2024 timeframe. Also, the mid-market segment is slated to lead the segment.
Technology is playing a pivotal role in encouraging businesses to outsource payroll services. It can be easily accomplished through SaaS platforms, cloud, and online portals that make communication easy, economical, and accessible. In the past few years, it has become one of the most suggested outsourced services for small businesses. It simplifies business administration and relaxes the valuable time for management and employees so that they can focus on core operations while transferring the tedium and requirements of payroll management and compliances to the hands of experts.
Payroll outsourcing- Lifting small businesses
SMEs are under the major misconception that only big businesses can afford payroll outsourcing. Hence, many businesses hesitate in delegating this responsibility to third-party service providers. However, facts narrate a different story. In today’s date, payroll outsourcing is playing a stellar role in helping many tech startups and businesses to run their operations smoothly. These third-party experts manage all the payroll-related tasks giving adequate time & space to businesses for handling their processes. The major ways through which payroll is helping businesses are mentioned below:
Allows operators to focus on business
Effective implementation of a payroll management system through a third-party ensures that management can focus on the core operations of the business without worrying about the complexities of payroll-related activities. Hence, whether it’s a retail firm, services industry, startup, manufacturing, or a consulting setup, outsourcing payroll services essentially delegates the payroll activities to professionals freeing up the business leaders to focus on their next innovation and increasing ROI.
Reducing Labour
Calculating and managing payroll-related processes requires time & a specialized workforce. Hiring a third-party to manage it saves finances as well as time required to manage a full-time workforce in the office for maintaining payroll operations.
Accessible Technology
Technology has become one of the major factors that why outsourcing has become such an imperative approach for many small businesses. Nowadays, almost all payroll service providers have access to the latest technology and are adept at resolving concerns quickly in an efficient manner. Even employees expect updated payroll processes for easy access to their payment records, direct deposits, salary cuts, tax information etc, which gets difficult to manage with the increasing size of the business. Hence, it becomes critical for them to utilize the most updated technology to track and manage all the activities and processes. So, the solution lies in transferring the function to an expert. The software is intuitive and simple to use for the employees and investors can utilize these amenities by investing in the right payroll services.
Sometimes, an organization is also unable to match the work hours and pay for an employee as per his contribution. This often leads to dismay amongst employees. This may happen due to the absence of an accurate method for recording their work and time. When you outsource the payroll function, you can always recommend better solutions required for tracking employee time and attendance. This automatically helps in creating conducive work environment for employees, enhances their productivity, and garners savings for organizations.
Improves Compliance and Reporting
Compliance is an important legal aspect for any organization ensuring that businesses are adhering to various rules and regulations ethically. Compliance majorly includes laws related to tax, wages, filing deadlines, various forms and legislation. Besides every state has its unique complying requirements as well as undergo frequent changes and amendments. Managing it all daily simultaneously ensuring that the organization doesn’t face any penalty is a humungous task. Managers and management neither have time nor the right education to take care of these complex rules. In many cases, attempting to manage the legal requirements at their end has only complicated the process. By outsourcing payroll services to experts, organizations make certain that they do not experience any kind of compliance failure and face penalties consequently. Having an efficient payroll management system in place ensures that every penny is tracked down. It also provides a clear picture that where you stand in the business and what should be the next strategy.
Reduces risk
Tax regulations undergo changes and amendments by the government. Organizations need to be constantly updated to avoid any kind of penalty. It becomes a challenging task for the managers to stay upgraded with the latest laws and regulations. By outsourcing payroll services, managers can reduce the risk of failure in adhering to tax laws. The Internal Revenue Service reports around 40% pay over $800 penalties every year due to late filing or reports submissions with multiple errors. With payroll outsourcing, you can save financial resources while complying with IRS regulations and maintaining a good company image.
Better security
Employee data and the financial record is confidential for any organization. When you outsource the payroll process it ensures that these records are kept under greater security and handled by IT experts to keep them safe from security threats. Infotax offers comprehensive payroll services to small & mid-size business segments. We are focused on helping them to achieve their growth objectives faster.
