Payroll outsourcing — entrusting payroll management to external professionals — is on the rise worldwide. It helps companies reduce administrative burdens while minimizing risks related to legislation, penalties, and data security.
All it takes is an illness of an experienced payroll accountant, an unfilled position, or a mistake in legislative interpretation and the company risks delayed payments, dissatisfied employees, and fines from authorities. The demands on expertise are increasing, but qualified professionals are in short supply. This is where outsourcing comes into play, ensuring smooth payroll operations even where internal capacity falls short.
“In recent years, we’ve seen payroll outsourcing become common practice even among companies that would never have considered an external solution before,” says Ivana Hamplová, Head of Payroll Outsourcing at OKsystem, adding: “Clients often come to us because they’ve been unable to fill a payroll accountant position for a long time. In such cases, outsourcing isn’t just about costs, it’s a way to keep the entire process running smoothly.”
This is supported by European survey data showing that up to 83% of companies use some form of external support, and 7% fully outsource their payroll operations
Savings and assurance instead of complex administration
Payroll outsourcing helps companies cut costs while allowing them to fully focus on their core business. Savings apply not only to employee salaries, but also to software and hardware expenses, office space, and regular annual training on legislative changes approved throughout the year.
Speed and accuracy are key. Specialized providers take full responsibility for correct processing and guarantee compliance with current legislation.
“We’re able to complete the monthly closing quite quickly. On the first day, we close attendance, on the second we process bonuses, and by the fifth day, employees have their salaries in their accounts,” says Veronika Havlíková from the manufacturing company Aperam, which outsources payroll for more than 200 employees working in shifts.
The future: A hybrid model and focus on security
Alongside the full outsourcing of payroll, a hybrid model is becoming increasingly popular – companies keep part of the processing in-house but hand over critical areas to an external provider.
In addition to permanent outsourcing, companies can also benefit from temporary or emergency services. If a payroll accountant becomes unavailable, an experienced outsourcing firm, thanks to a well-structured system, digitized data, optimized HR processes, and easy cloud access, can immediately take over payroll management. External specialists can also often identify long-overlooked errors and suggest corrective measures.
Where outsourcing has its weak spots
Although payroll outsourcing can bring cost savings and simpler processes, it also has its limitations. One of them is the loss of internal know-how. Dependence on a single provider can make switching vendors difficult – both financially and timewise. For large companies, it may also be more cost-effective to keep part of payroll processing in-house. And since the work involves handling sensitive personal data, data security must always be a top priority.
However, reputable providers are well aware of these risks and have them fully addressed in their solutions.
You can find an article on this topic in Czech language on the Hospodářské noviny website.