Payroll management system versus payroll outsourcing

In-House Payroll Management System Versus Payroll Outsourcing

March 28, 2024

Categorised in: News, Payroll

There are a range of options for businesses when it comes to their employees payroll and ensuring payments are made accurately and on time. An in-house payroll management system can seem like the cheapest and quickest solution for many, and they do indeed offer a range of benefits.

But how do they compare versus payroll outsourcing? Here, we look at both to see which may be better for your business.

Payroll Management System Software

Traditional payroll management software has been a staple for many businesses, offering a digital solution to streamline payroll processes. They often include features such as calculating wages, managing tax deductions, and generating payslips and provide businesses with a degree of autonomy and control over their payroll operations.

In addition to these basic features, some software can offer attendance and payroll management combined in to one system, allowing businesses to manage employee attendance alongside their payroll.

However, while payroll management software can be effective for basic payroll processing, it may lack the advanced features required for more complex payroll scenarios. Additionally, maintaining and updating the software can be time-consuming and may require technical expertise. This may not be an issue for very small  businesses, but as they grow, management can become more time consuming and complex, and involves investment in ongoing training for staff to ensure they can effectively utilise the software.

Outsourcing Your Company Payroll

Outsourcing payroll involves entrusting payroll processing to a third-party provider, who handles all aspects of payroll administration on behalf of the business. Particularly for medium-sized orgainsations and upwards, this option offers a convenient and cost-effective alternative to managing payroll in-house. Outsourcing providers leverage specialised expertise and advanced technology to ensure accurate and timely payroll processing whilst also staying compliant with relevant regulations and tax calculation changes.

One of the primary benefits of outsourcing payroll is the time and resources it saves for medium and larger businesses. By delegating payroll responsibilities to external experts, companies can focus on core operations and strategic growth initiatives. Additionally, outsourcing eliminates the need for investing in payroll software or systems, reducing upfront costs and ongoing maintenance expenses.

Outsourcing payroll rather than utilising a payroll management system also mitigates the risk of errors and compliance issues, which can have serious implications for businesses. Payroll providers stay up-to-date with ever-changing tax laws and regulations, ensuring that calculations are accurate and compliant. This relieves the burden of staying abreast of complex legislation, reducing the risk of penalties and fines.

Furthermore, outsourcing payroll enhances data security and confidentiality. Reputable payroll providers employ robust security measures to safeguard sensitive employee information, reducing the risk of data breaches or unauthorised access. This is particularly important in an era where data privacy regulations are becoming increasingly stringent.

Moreover, outsourcing payroll offers scalability, allowing growing companies to adapt to changing business needs without worrying about scaling their payroll infrastructure. Whether the business experiences growth, or indeed downsizing, outsourcing providers can adjust payroll services accordingly, providing flexibility and cost-efficiency.

Outsourcing your company payroll


While payroll management software and attendance and payroll management systems offer viable options for small companies, for medium and larger businesses seeking to streamline payroll processes, outsourcing payroll emerges as the superior choice for most. With its myriad benefits, including cost savings, expertise, compliance, data security and scalability, outsourcing payroll enables organisations to focus on their core business objectives while ensuring efficient and error-free payroll admin.

HIVE360 – The Perfect Payroll Solution For Medium-Sized Businesses

HIVE360 is the perfect payroll solution for businesses looking for a trusted and experienced partner. Especially when payroll is combined with our other services such as employee benefits, wellbeing support and pension auto enrolment, all housed within our game changing Engage App.

You can book a demo or contact one of our experts for more information here.