Payroll Outsourcing What it is? Why do Companies do It?

Traditional Payroll Management

Payroll is common terminology for salary management. The salary structure for any big company differs much from small businesses and is highly complex. When salary disbursement takes place by traditional means, it requires huge manpower and a lot of manual bookkeeping. Writing down hundreds or thousands of paychecks, getting them signed by a designated authority, and then physically distributing them.

Manual payment maintenance was done as a traditional business mode before computerization came into the picture. The whole process besides being time-consuming was often riddled with errors. The companies incurred substantial expenses and spent a lot of time on salary management at the cost of core focusing.

Computerized Salary Management

A paradigm shift took place when computers came. The desktop made basic accounting possible using programs made by experts. This required a lot of time, as the operator worked on a solo desktop and there were several inputs to be made accurately. But with greater connectivity between different machines made possible by networking, manual salary management could be executed by several operators and the workflow became smoother.

Payroll Management Revolution

The major technology breakthrough was brought about by the introduction of the Internet, and subsequent advances in web applications and programming. One of the first computerized accounting systems in India was Tally, the application was made by Tally Solutions and sold to small businesses. Tally was subsequently developed into an enterprise version. This vast software application made salary management possible besides computerizing many other human resource-related matters. From the bulky ledgers maintained by a plethora of accountants, the onus of salary management was transferred to computers.

Subsequently, there emerged many application software that made fully automized payroll management possible.

Payroll Outsourcing Services

As automation in payroll services became common companies realized that they could pass on the management to specialized companies. Besides the burden of managing the salary department, they gained from professional services. These payroll outsourcing companies provided excellent services at a lesser cost.

The process is not complicated, the companies have to provide all the necessary information and details about the workforce. They also have to acquaint policies regarding, insurance, perks, health and holiday benefits, etc. They can also integrate restricted MIS with the service providers. Companies need to sync all necessary details and tools for perfection and keep on providing updates and alerts on regular basis.

Payroll service providers must strictly comply with security and privacy considerations. There should be a data protection policy in place for smooth and secure functions. The service providers should provide real-time alerts and necessary data on employee status whenever required.

Uday writes often on Indian wildlife especially about the tigers. He works as a naturalist and is fond of travel. Uday also provides search engine optimization service and website contents in English.