Payroll: Discreet administrative work or done by an expert?

Payroll management is the process of administering salaries to all the people who are part of a work team. Likewise, it implies automating the management of salaries by collecting all the labor data of an employee. A company can form its own team to handle payroll tasks. Or instead, it can outsource this service to another company specializing in the field.

In this article, we will explain how to manage a company’s payroll either directly or by outsourcing this process through payroll outsourcing companies.

  1. What is payroll?
  2. What is payroll outsourcing?
  3. Advantages of payroll outsourcing
  4. Why should you outsource your payroll processes?
  5. How can we help you outsource your company’s payroll?

1. What is payroll?

Payroll records are essential documents in labor relations. They show in detail the worker’s salary, along with their deductions. There is a mandatory withholding set by current legislation depending on each country.

Likewise, payroll is the distribution and order of the different salary levels that an organization establishes in order to pay its workers. This is a document with legal effects, as it shows that the worker has, in fact, received their salary.

From an accounting point of view, payroll is the financial record that a company keeps of its employees’ wages, bonuses, and deductions. This makes it a critical factor for business accounting. Through these documents, the employer will be able to observe how much money the company spends on its workers and therefore, will be able to make the decisions that best suit the business in that regard.

Due to the complexity of this process, many companies opt for outsourcing this task. Normally, large companies have their own Human Resources department that directly handles the company’s payroll. On the other hand, many smaller companies outsource payroll to agencies with experts in the field.

2. What is payroll outsourcing?

Payroll outsourcing consists of contracting the service of a third-party. In this way, they are in charge of carrying out the process of paying the salaries of the employees and their derivatives. In other words, this means delegating administrative management which requires time and constitutes difficulties at the legislative level with the aim of being able to concentrate on the development of the main business activities.

Often, small business employers choose to hire a payroll outsourcing service, although certain larger companies also opt for this option. There are many reasons why a company may decide to outsource their payroll process.

Payroll can be an extremely complex process. For this reason, the strategy of outsourcing this task is mainly used to offload work from the Human Resources department. Thanks to this, they can dedicate their time to activities that are more profitable for the company.

In addition, as payroll consists of several simultaneous processes, this could lead to errors that can, then, lead to legal consequences for the company. This represents a financial threat for most small businesses.

Similarly, before choosing to outsource this process, it is necessary to verify how much expertise the members of your Human Resources Department have in managing payroll. This is a key factor in determining whether to outsource it or handle this process in-house.

Payroll outsourcing has different modalities:

  • Technological outsourcing: It consists of contracting specific technologies or tools for internal payroll management.
  • Outsourcing of services: Unlike the previous case, under this outsourcing modality, the actual management of the payroll is contracted through a third-party by means of experts who guarantee both effectiveness and the reliability of its results.

3. Advantages of payroll outsourcing

There are many benefits to outsourcing payroll, as HR employees often dedicate a large part of their job to this process. By delegating this task to another company, they can focus on other activities. In addition, it is equally important that workers feel comfortable in the workplace. Freeing up space in their schedule by lightening their workload will always be a good move towards job satisfaction.

It is critical to be at the forefront of new business trends in order to obtain greater efficiency, which makes your company a better place for everyone who works in it. Therefore, outsourcing is a trend in today’s business culture, allowing the company to develop and evolve with greater speed and quality.

Many companies, regardless of their size, opt for payroll outsourcing thanks to its great advantages. Here are some of them:

3.1 It allows the company to concentrate on activities that generate profits

The payroll process is a task that takes time and is not used for activities that allow the company to grow economically. On the other hand, if the company hires another company to take care of this activity, the main company will get rid of this hard work and will be able to focus on the activities for which it was created and that make money.

With the application of this business strategy, your workers will have more time available that they can use in certain important tasks or projects for the development of the company in search of greater productivity. And this is because these workers, who used to spend practically all their time managing payroll, are now freed from this work, they have more time to focus on important issues to improve your company‘s business productivity.

3.2 Employee information management

It helps the employee to have more information about the status of their salary. Outsourcing makes it easier for the employee to help them have control of dividing their payment into different bank accounts, so they can be more focused on their savings goals. 

Reserving fixed percentages of each check-in in different savings accounts so that the rest is allocated to a standard account where they keep their billing, can help workers in their task of saving. This encourages them to work harder.

3.3 Control of personal data

Payroll software keeps you from depending on your HR management, in order to obtain any type of information. This makes it easier for the worker to verify and -if necessary- change their personal payroll information at any time. In addition, this can be done from a computer, they have more control of their personal data.

However, when you use this software, you should know how to keep payroll data safe. This will prevent any incidents that could negatively impact your company or workforce from happening.

3.4 Decrease in errors

As this activity will be in the hands of an expert company, their job is to ensure that this process is completed without mistakes or inconveniences. It is common for companies to have to pay fines for errors made in the payroll process. This would be highly unlikely if a specialist company is hired.

3.5 Reduced investment

Managing payroll manually is already behind, and companies have resorted to implementing special payroll systems. Without a doubt, this process being automatic reduces wasted time, costs, and errors.

Now, the costs of manual systems are usually expensive, especially to small businesses since they must pay a provider for maintenance and updates. Likewise, it will also take time to train employees for the correct handling of these systems.

Therefore, it is advantageous to have a payroll technology service provider. This company will already have the most up-to-date systems to put them at the service of your company.

3.6 Fewer expenses

The fewer resources a company has, the more it should take advantage of the activities that generate more profits. In the same way, outsourcing these tasks translates into getting rid of the unnecesary investments of manual payroll.

Regardless of the economic level and the number of workers in a company, this is a great option, especially for companies that are just starting out in the market, wishing to evolve satisfactorily

Of course, this process itself does not generate money for the company. However, having employees dedicate their time to activities that are not generating any revenue, in many cases, is not the most convenient.

It is for this reason that, for lower-level companies, it is more effective and practical to outsource their payroll process.

3.8 Simplification of tax information

Tax withholding is difficult for many to understand. But, by choosing modern payroll providers, employees will have quick and easy access to their tax information, and in an easily understandable format.

3.9 Compliance with current regulations

Since the service provider applies the labor laws of each country, the employer is exempt from responsibilities regarding legal and fiscal obligations. The employer has employment contracts and wage sheets that comply with the regulations. Therefore, he or she will not face any fines or other sanctions from the labor authorities.

4. Why should you outsource your payroll processes?

Contracting a payroll outsourcing company does not mean that the company will dismiss its workers. Instead, it means that they can focus on other HR-related functions, and other tasks which complement payroll, improving their use.

In summary, the main benefits of payroll outsourcing are:

  • It allows the company to focus on its line of business, improving results.
  • Outsourcing assumes that experts will take care of the management of payroll processes, preventing errors and thereby, improving results.
  • The client company ensures compliance with the contracted services. It is not affected by the vacation periods, sick leave, permits, or any type of leave of its HR workers, as would be the case if payroll was managed internally.
  • Reduction of personal costs. The client does not need to maintain a team for payroll management, which reduces salary costs.
  • By contracting outsourcing services, the company also avoids the costs of acquiring and maintaining software for its management.
  • Compliance with labor legislation is guaranteed, as well as updates to the agreement. The client can forget about having control over the publication of new regulations which may affect their payroll’s management.

Payroll management is one of the most demanding and delicate processes in a company. These tasks take effort and financial investment within the Personnel Administration Department.

In general terms, the main objective of outsourcing payroll is to delegate this task and relieve the HR department’s burden. As a consequence, the company can be more productive, devoting time and resources to activities that generate greater profitability.

5. How can we help you outsource your company’s payroll?

EOR Middle East can help your company enhance its potential with the help of a payroll tool that fulfills all of its needs. Our HR outsourcing services are performed through a process and control framework adaptable to your business.

Payroll outsourcing in the UAE is a widely used practice. In this way, there are many payroll outsourcing companies in Dubai, Abu Dhabi, Sharjah, and more, that you can consider to implement their software in your business. However, you should always look for your best option.

We are providing businesses with the best payroll outsourcing services in several countries across the Middle East.

Making the decision of delegating your payroll activities will allow your company to scale to other levels. With many years in the market helping companies thrive with the help of our solutions, you can leave this complex task in our expert hands. On EOR Middle East, we make sure to put businesses in the path for success.

Would you like to reach out to us and learn more about our solutions? Reach out to our team via email at [email protected]. Whether you wish to implement our payroll or any of our HR services, we will be glad to guide you and assist you. Contact us now!

On the other hand, are you a highly-skilled professional looking for the opportunity to grow professionally? There are many job offers that you can apply for on Send your resume now to [email protected] get in touch with the most expert recruiters. Do not wait any longer and secure a job that boosts your professional career!

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