Top 6 Most Impactful Benefits of Payroll Outsourcing in 2024

Introduction to Outsourcing Payroll Services 

The payroll process plays a crucial role in an organization and is one of the critical processes since it is directly linked to employee satisfaction, legal and regulatory compliance, and financial budgets. We need to implement strong control to enhance the payroll functions processes and system in the organization.

Furthermore, as we all are aware of that payroll functions are very complex because of the various statutory laws and regulations are applicable and it is very sensitive to Indian society. Therefore, expert knowledge shall be required while processing the payroll.

To avoid and mitigate the below challenges which may occur at the time of in-house payroll functions, the organization can decide to outsource their payroll functions and processes, which helps the organization to process payroll in an accurate and timely manner. Also, when a small or medium-sized organization outsources its payroll functions to the service provider it can save time and cost for a business owner.

Understanding Payroll Challenges in India 

• Complex Statutory Compliances and Regulations- the law, regulation, and taxes will differ from state to state, and understanding all the regulations applicable is difficult. Failing to comply with these regulations puts us at risk of financial penalties and criminal charges.
• Lack of data privacy and security- Data security is a crucial aspect of payroll since we collect personal and sensitive data of the employees during the processing of payroll. Data breaches can create financial and reputational losses.
• Diverse workforce considerations- The payroll is a function that requires good process flow between various employees or diverse workflow. Since the organization hires employees at various levels, positions, and states. To understand the queries at different levels are important. Failure to understand may create workforce dissatisfaction.
• Data Accuracy and Timeliness- Data accuracy is a critical part of payroll processing, inaccurate data can create inaccurate payments to the employees, non-compliance of the applicable laws, and the employee’s dissatisfaction.
• Choosing a correct payroll application- It is a part of payroll processing, because of various technologies and applications available in the market, it is important to choose a correct application that meets the organization’s objectives and goals.
• Data Management- If the organization doesn’t have good data management practices, it may lead to various problems i.e. data integrity, security risk, data redundancy, duplication, and audit & reporting difficulties.

What is Payroll Outsourcing? 

Payroll Outsourcing is the business practice when the organization contracts with an external service provider to perform the payroll functions and processes. Payroll outsourcing is a cost-effective tool in small businesses as compared to larger organizations, for example, AKM Global has expertise in payroll compliance in India, therefore getting a package from a service provider like AKM is quite cheaper than hiring an internal staff.

Top 6 Benefits of Outsourcing Payroll Services 

There are several benefits of Payroll outsourcing, It not only provides quality but also saves time and cost. Some of the other advantages of outsourcing payroll services are listed below.

Cost Savings 

Payroll outsourcing is a cost-saving or effective tool for the business since it can avoid hiring, maintaining, and providing infrastructure to the internal staff. For example, the organization would need two or more staff for payroll & HR functions and incur a cost for salary, and social security after spending costs to maintain internal staff, the organization does not ensure error-free payroll functions because of the lack of expertise in various areas such Payroll Taxes, Social Security and labor compliances compliance in India.

Time Efficiency 

The payroll functions are a taking and sensitive process as we need to disburse payment on time, and it takes many human hours to process payroll. Once the organization outsources its payroll functions, it starts delivering payroll on time with accuracy and completeness.

Scalability and Flexibility 

When the organization is planning to scale up its business with the In-house payroll processing team, it is tough to manage as per needs and resources, however, if you avail service of the outsourcing firm (AKM), it is much easier to scale up the business with the outsourcing team without taking any extra burden on your shoulder, a few examples listed here :

• The resources can be readily available as per the needs of the business.
• The changes can be implemented as per the needs of the business.
• Timeline can be flexible as per the needs of the business.
• The adjustments can be made as the business needs.
• Customisation can be implemented as per the requirements.

Fewer Payroll Mistakes 

The payroll process is a sensitive function that requires processing with high accuracy and completeness since it involves employee satisfaction and financial implications. Below are some measures placed by the firm to minimize payroll mistakes:

• The outsourcing firm (AKM) automates the payroll functions and delivers dedicated skilled resources to process payroll.
• Quality assurance- the team is working on quality assurance by implementing ‘Make and Checker’ policies
• Follow strict controls and thorough review of the payroll before finalizing the payroll.

Reduced Risk of Non-Compliance 

AKM has a specialized team and expertise in Labour and Tax regulation since the payroll functions are involved in various tax and other labor compliance in India. AKM Global organizes and delivers regular training to the internal team in the specialized area to be upgraded and updated on regulations to ensure compliance. Moreover, AKM Global publishes and sends regular updates to the clients for the recent changes, notifications, guidelines, and law amendments issued by the Government so that the organization is aware of the impact of the recent changes introduced in the law.

The organization can eliminate the risk of non-compliance by choosing AKM as a payroll Outsourcing firm.

Increased Data Security 

The payroll functions involve a lot of personal information and data, and the service provider like AKM is maintaining a server where all data should be kept safe and secure.

Below are some measures taken by outsourcing firms (AKM) to protect sensitive data which increases data security as compared to In-house arrangements.

• ·All data should be shared via a shared drive, restrict data flow over the emails
• The external persons are involved in the payroll process hence data confidentiality can be maintained.
• All sensitive data such as payslips or payroll registers should be password protected.
• All the sensitive data such as payslips or tax and basic information should be directly accessible to the employee via a separate interface available to each employee to avoid the risk of interchanging information.
• Outsourcing firms like AKM conduct an ‘Information Security Audit’ in regular intervals to check the control in place in AKM.

How Does Our Payroll Outsourcing Work? 

Below is the step-by-step process of how AKM Global handles payroll outsourcing

1. Onboarding Planning and Discussion- AKM set up an initial call when the new payroll assignment is received, it includes the introduction of the team, background of the change or outsourcing, what is the current process. AKM and the organization team also discussed the requirements and expectations during the discussion.
2. Data collection- after having a discussion on the expectations, AKM starts sharing the detailed checklist for data collection and smooth transition.
3. Follow-up Meetings: Once all data is received as per the requirement share in the data collection steps, the firm can plan on the other pending points.
4. Choose the best web-based application: Once initial onboarding is completed, AKM starts analyzing the option for the payroll application that suits the client's requirement for payroll processing.
5. Fix the deadlines: we set the payroll deadlines and the responsibilities.
6. Software and process training: After a smooth transition and implementation of the payroll application, we organize a training session for Admin, HR & Finance Teams in the organization.
7. Payroll Processing

• Creating the breakdown of employee CTC as per the provision of tax laws.
• Setting up the payroll software as per company policies.
• Preparation of employee tax computation based on the Investment declaration declared on payroll ERP.
• Verification of Investment details submitted by an employee at the yearend or at the time of exit from the company.
• Preparation of monthly employee register, leave register, overtime register, and variance report to HR for review and approval.
• Creating monthly payslips with 100% Accuracy.
• Preparation of Full & Final settlement for ceased employees or employees who have resigned as per company policies.
• Issuance of Form-16 at the end of the Financial Year to employees.
• Filling of Quarterly TDS returns basis the income tax computation for all employees.

8. Tax and Labour Compliance and its reporting.
9. Handling Employee queries: We respond to the queries of current employees from time to time with respect to taxes, payroll calculation, regulatory compliances, etc. such as Social Security queries such as EPF, ESIC, or their KYCs queries.
10. Continues Support 

Contact AKM For Payroll Outsourcing Services

Payroll outsourcing is our specialty, and we have a team of experts CAs who perform the payroll services of each size of the organization, we are open to customized services. moreover, we have a track record of 99.7 % accuracy and data security. Contact us now for your Payroll outsourcing need.