Payroll is one of the most important tasks that businesses cannot afford to process incorrectly. Hiring an internal team to process payroll can be an option but is expensive. First, payroll processors should either be licensed accountants or bookkeepers to ensure that the payroll is organized. Second, they need equipment with proper accounting software for the payroll team to work with. Not to mention the additional space to work on.

Lately, businesses have been using remote teams and business process outsourcing companies to help with their payroll processing.

What is payroll outsourcing

Payroll outsourcing is hiring a third-party for payroll solutions. These companies form a team to organize employee records, handle books using accounting software, and process compliances such as tax forms, social security updates, and HMO contributions. 

Employees from these teams are accountants and bookkeepers with expertise in handling corporate accounts, especially payroll. With this, businesses can assure that their payroll accounts are handled and organized properly. 

Why outsource payroll

Why outsource payroll

The main purpose of outsourcing payroll is to ensure business continuity while saving on costs. However, there are other reasons aside from these that businesses should consider when they want to outsource their services.

  • Save time. Startups that outsource their payroll save a lot on time and effort to add this to their duties. They don’t have to worry about paying their employees on time since they have a team to do it.
  • Expert handling. Since this is handled by experts, they don’t have to worry about organizing books for payroll as well. They can save effort on auditing their records for corporate tax filing and regular compliances by the government.
  • Access to technology. Outsourcing also allows them to have access to the latest software and tools provided by their BPO company.

Pros and cons of payroll outsourcing

Outsourcing payroll can have advantages and disadvantages for a company. However, these can be worked out by both the BPO and their clients to ensure that these risks will be minimized.

ProsCons
Better government complianceExposure to sensitive records
Minimal errorsLack of control
Talents and expertise from different countriesDelays on payroll errors
Access to better equipmentInaccuracies on filed forms
More focus on core activitiesHidden charges by BPOs

Outsourced payroll services

Payroll services can be outsourced in different ways: through freelancing, agencies, and business process outsourcing.

  • Freelancing. Businesses can hire freelance accountants through different platforms that can focus on organizing employee payroll. At times, they hire virtual assistants to do overall accounting or HR duties for their convenience.
  • Agencies. Accounting firms and agencies are usually hired for quarterly or annual auditing of books of accounts for a company. This includes income tax filing for employees.
  • BPO Company. With outsourcing business processes, they don’t just have access to experts in handling payroll accounts. They also have access to different tools and equipment that their BPOs provide for their teams. 
Outsourced payroll services

Online payroll services

Payroll teams use different platforms to organize their payroll accounts. These platforms may vary on the services, prices, and features that they offer.

Gusto Payroll

Image via gusto.com

Gusto Payroll not only offers fully-automated payroll services for employees. It is an all-in-one platform that includes tax filing and HMO contributions update. Gusto also enables integration with time tracking, expense monitoring, and accounting software for a more convenient way of managing HR and accounting duties.

Intuit Quickbooks Payroll

Image via quickbooks.intuit.com

Quickbooks Payroll integrates with Quickbooks for better management of business accounts. It also allows users to file and pay corporate taxes within the platform for convenience. What’s good with the platform is that they guarantee accurate calculation and on-time payment of taxes. In case their clients are charged with penalties, they will waive the fee on behalf of the business. 

ADP

Image via adp.com

Being the largest payroll service in the US, ADP offers its clients a full-service payroll and HR service. Aside from tax filing, payroll, and HMO contributions, it also enables payment of insurance and retirement plans. The platform has several features for different business sizes. Payroll for small businesses has all features activated while medium to large enterprises has the option to scale employees and manage outsourced teams.

Paychex

Image via paychex.com

Paychex offers both payroll-only and full payroll + HR solutions for small and medium businesses. The payroll-only option includes organized payroll account, direct deposits, tax payment, time tracking, and other basic features of the platform. Full payroll + HR, meanwhile, includes new hire onboarding, custom reports, employee screening, training, and even financial wellness program. 

OnPay

Image via onpay.com

OnPay is a perfect tool for small and medium businesses. They have basic features such as automated salary and tax payment, insurance contribution, and error-free filing of tax forms. It even allows its users to manage their payroll through mobile for tax processing away from their computers. The platform even lets employees self-onboard through the system and integrate records from QuickBooks and other top accounting software.

Outsourcing payroll companies

Tholons ranked the top countries to outsource in terms of manpower, technology, and other aspects. India and the Philippines are the top outsourcing destination because of their strong English proficiency, expert workforce, cheap labor costs, and 24/7 service. BPO companies in these countries cater to different sectors with different specializations.

Outsourcing salary comparison chart

All amounts are in U.S. dollars (USD$) per annum

JOBSPHILIPPINESU.S.U.K.AUSTRALIA
Accountant$5,959$67,190$72,923$58,479
Customer Service$3,337$29,717$22,137$35,275
Copy Writer$4,767$56,600$52,088$62,653
Graphic Artist$3,883$46,658$38,668$37,596
HR Manager$9,506$78,007$46,669$66,518
IT Representatives$5,722$61,758$24,741$59,938
Project Manager$21,458$108,000$57,296$86,029
Software Developer$7,221$81,994$39,913$62,653
Software Engineer$8,333$109,087$44,459$62,653
Technical Support$4,638$36,924$35,225$38,232
Team Leaders$7,152$75,823$31,174$45,428
Virtual Assistance$2,285$42,240$39,066$31,797

Average monthly outsourcing cost guide (USD)

The total cost varies depending on the role and experience level, as well as the BPO facility, service levels and quality.

Total cost $1,200

Entry-level role

Employee salary $400-$500pm BPO facility & service $500-850pm TOTAL COST $900-$1,350pm
Total cost $1,450

Mid-level role

Employee salary $700-$800pm BPO facility & service $500-850pm TOTAL COST $1,200-$1,650pm
Total cost $1,700

Technical role

Employee salary $950-$1,200pm BPO facility & service $500-850pm TOTAL COST $1,450-$2,250pm
Total cost $2,700

Executive level

Employee salary $1,800-$2,200pm BPO facility & service $500-850pm TOTAL COST $2,300-$3,050pm

Using a BPO supplier vs. agency vs. freelancer vs. Upwork

BPO CompanyAgencyFreelancerUpwork
Best rates
Quality control
Expand and scale
Operational backup
Leadership team
Trading and upskilling
Facilities and offices
HOW WE HELP YOU

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About Outsource Accelerator

Outsource Accelerator is the trusted source for independent information, advisory and expert implementation of Business Process Outsourcing (BPO)

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Outsource Accelerator offers the world’s leading aggregator marketplace for outsourcing. It specifically provides the conduit between Philippines outsourcing suppliers and the businesses – clients – across the globe.

The Outsource Accelerator website has over 4,000 articles, 250+ podcast episodes, and a comprehensive directory with 700+ BPOs… all designed to make it easier for clients to learn about, and engage with, outsourcing.

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Outsource Accelerator is the leading outsourcing advisory for the Philippines, as well as offering a full spectrum of brokerage, implementation and co-management services.

Derek Gallimore

Derek Gallimore has been in business 20 years, outsourcing 8+ years and living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.

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