Should I outsource payroll or keep it in house?

Payroll outsourcing is often promoted as an ideal solution for companies of all sizes. And it’s certainly a tempting proposition. The world of payroll is so complex, you might think it’s better to leave everything in the hands of an expert, whether that’s a payroll service provider or simply a smart-looking piece of software.

Why outsource payroll?

Of course, there are many benefits to putting your trust in experts and tech. Minimizing payroll errors and saving your HR team time are just the beginning. The right payroll provider or software solution should offer much more than operational efficiency and legislative compliance.

Why keep payroll in-house?

Keeping payroll entirely in-house offers the benefits of closer control and greater flexibility. Internal payroll managers can customize the process to suit their own preferences while providing a tailored service to employees. It can also be easier to make changes at speed, whether that’s fixing an incorrect paycheck or implementing new payment policies. Perhaps most importantly, managing payroll internally enables you to build a store of expertise that grows with your business over the long-term. When you create career paths for payroll experts, you’re also investing in employee experience. 

What the data reveals

Our research shows that although 93% of European companies manage payroll internally to some extent, only 46% say that their internal staff are actively involved in payroll tasks and sub-processes. When you zoom in to look at larger organizations with over 2500 employees, this number rises significantly to 54%. If growth is on the agenda, it clearly becomes more important to develop payroll expertise in-house—then you’ve got the ability to take direct control of payroll quickly, whenever you need it. 

It's therefore not surprising that most European employers choose a mix of in-house and outsourced payroll handling. It’s all about finding a balance between the two that meets the unique needs of your business, and not being afraid to adjust that balance as needed. The right payroll outsourcing partner shouldn’t be taking all the work out of your hands or leaving you out of the loop. Instead, they should be working with your team side-by-side, sharing knowledge generously and empowering them to develop their own payroll expertise.