Payroll Outsourcing: Find Out How It Works and Know Its Benefits

Table of Contents

Organizing the payroll is undoubtedly one of the biggest challenges in the business routine. Even for this reason, many companies are opting for payroll outsourcing, where an external company takes on this task.

In this case, professionals with greater expertise in the subject, that is, specialized in calculations and labor laws, are responsible for taking care of this bureaucracy. Thus, the contracting company is able to focus more on strategic issues, of people management.

According to a survey conducted by Grand View Research, in 2021, spending on the service outsourcing market, also called BPO (Business Process Outsourcing), exceeded US$ 237 billion.

But is it really worth betting on payroll outsourcing? In this article you will find:

  • What is BPO?
  • What is Payroll Outsourcing?
  • What are the benefits of outsourcing payroll?
  • What is the difference between internalization and outsourcing?
  • What precautions to take before outsourcing payroll?
  • How much does a payroll BPO service cost?

Good reading!

What is BPO?

The term BPO is the acronym for the word Business Process Outsourcing, which in London means “Business Process Outsourcing”. We've already talked about the topic in another article, read here.

This strategy happens when a company uses another company to take over/control some of its activities.

That is, an outsourced company, with a specific expertise, partially or completely assumes a certain area or sector of the organization that hired it.

One of the most common routines in this plan is payroll outsourcing, we'll talk about it below.

What is Payroll Outsourcing?

Payroll outsourcing or payroll BPO consists of transferring this routine to an outsourced company. In this case, the contracted company will assume this routine, considered one of the most complex in the company.

This means that this outsourced company will be responsible for solving everything that involves the payroll, such as:

  • salary, vacation, or advance calculations;
  • document storage;
  • terminations and admissions;
  • changes in salaries and positions;
  • issuance of payment slips;
  • document management and sending data to e-Social;

These are some of the tasks performed by the contracted company in the face of an outsourcing company payroll.

With this, the company that hires this service optimizes this work, it reduces the chances of mistakes and is supported by a team of specialists to avoid problems in the scope of the labor legislation.

What are the benefits of outsourcing payroll?

Outsourcing payroll can provide numerous benefits for the company betting on this strategy, the main one being being able to get rid of a routine extremely bureaucratic to focus on more strategic issues of the organization.

However, the benefits do not stop there, below we list some of the main reasons why companies end up opting for payroll outsourcing.

Prevents failures in this process

Closing the payroll is one of the company's most complex and time-consuming processes. With countless calculations, deadlines and rules, any error in this regard can result in the payment of fines and even in labor lawsuits.

However, with payroll outsourcing the company can avoid any failure in this routine. Since, a company specialized in the area has professionals with expertise to perform the task, who will be completely focused on this work.

Reduces the time devoted to this routine

Another major obstacle in organizing the payroll is the time devoted to this routine. Due to its complexity, a careful look at details is essential and the company ends up dedicating hours and hours to this bureaucracy every month.

With payroll outsourcing, the company makes room in its routine to focus on strategic issues (sales, marketing, people management), making the work flow faster and more effective.

Since the responsibility of organizing the payroll becomes this contracted company, which even taking advantage of its expertise can speed up this closing process.

Offers greater security in data storage

THE safety It is essential for any company routine, especially when it comes to employees' personal data. In many cases, the company is barely aware that this data is exposed to the risk of leakage and fraud, due to insecure internal software.

By opting for payroll outsourcing, the company ends up increasing data security in this process. Since these companies, because they are focused on this type of work, routinely invest in a state-of-the-art structure.

It has secure, cloud-based servers with daily backups, high-level encryption and data management in compliance with the law.

generates savings

Building a secure data storage system or even hiring professionals with extensive knowledge of labor laws can jeopardize a large part of the company's capital.

However, this reality is essential since closing the sheet does not allow errors.

When a company decides to outsource its payroll, in addition to reducing the time devoted to this bureaucracy, which can mean focusing on new ideas and projects, it saves on the physical structure to support this data storage system.

This is because the outsourced company already includes all the necessary resources so that the contracting party can give up internal investments in this routine.

With payroll BPO there is also no need for the contracting company to hire more employees to take care of this bureaucracy, nor is it necessary to invest in-house software, since the outsourced company will offer all these resources.

Boosts the productivity of this sector

With the outsourcing of payroll, the productivity of the team and sectors involved in closing the sheet is high. Since these professionals will be able to give up this bureaucracy, gaining time to dedicate themselves to the core business from the company.

In this transfer of responsibility, regarding payroll management to the outsourced company, it is possible to earn good hours of dedication to the creation of new projects, implementation of new ideas and the management of strategic activities, which will really make the company grow and profit .

What is the difference between internalization and outsourcing?

The internalization of the payroll, as the name implies, refers to the management of this routine within the company, an internal control of this task. In this case, the company needs to dedicate a sector or a series of professionals to meet these demands on a daily basis.

On the other hand, outsourcing occurs when the company partially or completely delivers this routine to an outsourced company trained in this task.

This company, in turn, will offer a team specialized in labor laws, calculations or any issue involving payroll.

Not to mention that it will offer a software to manage this process, facilitating communication between those involved in the process.

What precautions to take before outsourcing payroll?

Like any service, payroll outsourcing requires the company to perform a thorough and prior analysis before contracting this service.

So, below are some of the main precautions your company should take before closing a deal:

  • do research on the company's image in the market;
  • search for references about the company;
  • pay attention to proof of payment related to labor obligations (tax and social security);
  • check if the company's model is adaptable to your reality;
  • analyze if its core activity is payroll management;
  • monitor the execution of the process, assess the quality and compliance with deadlines.

How much does a payroll BPO service cost?

The cost to outsource payroll tends to vary depending on the size of the company, number of employees, services the BPO will have to undertake, activities involved in the proposal, and the complexity of the process.

Currently, according to a oHub survey, the value of an outsourced payment varies in the UK, ranging from R$ 250.00 to R$ 7,150.00, considering the size of the contracted company and the number of employees.

As you can see, payroll outsourcing can be extremely beneficial to the company if it is well organized and planned. Since, this way the company can streamline this bureaucratic process and focus on strategic activities.

Salary on demand: savings for the company, well-being for the employee

Payroll outsourcing can be one of the companies making payments more easily, and also have its costs reduced by hiring a specialized team. Another corporate benefit that can benefit the financial health of the business and the employee is the salary on demand.

Get to know the tool HR Consultant and find out how the system that implements payment on demand works, that is, employees of a company can advance part of their salaries when they need it.

This tool is changing the way employees handle their salary and generating more satisfaction and motivation at work.

HR Consultant can be one of the benefits most valued by those who work in your company. Talk to an expert and learn more!

We hope that our tips will help you to win a financial health wide and full of achievements!

And, if you liked our content and would like to have more information always first hand, directly in your e-mail, subscribe to our newsletter right now!


HR Consultant UK can help if you have any questions about Payroll Outsourcing: Find Out How It Works and Know Its Benefits
. Our HR consultant in London can assist you if you live in London. Suppose you live further afield thats not an issue! Visit our HR Consultants Near Me page to find the best consultancy nearest to you.
See you next time!



Leave a Replay

Why HR Consultants UK!

HR Consultant UK Offers HR advice for local businesses in the UK. Our HR Consultants Near Me Page will help you get in contact with local HR Consultancy.

Alternatively, view our list of cities covered by HR experts.  Its time to get all your HR issues solved! 

Enjoy the Blog!

Recent Posts

C'est un quadra, commercial dans une mutuelle, qui est à l'origine du concept. Il avait lancé en 2018 un groupe sur LinkedIn dédié à la recherche d'un emploi. En janvier 2022, il a récidivé avec le concept #iciçapostule, qui compte 35.000 fidèles.

DecryptionWho is behind #iciçarecrute, which has gone viral on LinkedIn?Published on June 28 at 7:02DECRYPTAGE// Nearly 57,500 people today refer to the hashtag #iciçarecrute on LinkedIn to tag, post or consult job offers. This virality is maintained by a handful of volunteers, convinced of the strength of this social network to help candidates. Story of a disinterested collective adventure with many twists and turns.

DecryptionWho is behind #iciçarecrute, which has gone viral on LinkedIn?Published on June 28 at 7:02DECRYPTAGE// Nearly 57,500 people today refer to the hashtag #iciçarecrute on

Read More »

Follow Us

Sign up for our Newsletter

Click edit button to change this text. Lorem ipsum dolor sit amet, consectetur adipiscing elit

Local HR Consultants

Local HR

Local HR advice with our partner’s Bark.

Finding A Recommended HR Consultant Near You Is Easy With Our Partner Bark. 100s of Top Rated Local Professionals Waiting to Help You Today. 

Book HR Consultants