Outsourcing is a common phenomenon but there is a myth that surrounds it. Many companies believe that outsourcing is only for large enterprises running mammoth-scale operations. And the tasks they outsource are largely a suit of operations uncommon to other sectors. This may be partly true, but the truth is, outsourcing can be leveraged by companies of all sizes and for all kinds of functions. Outsourcing helps specialists take over a particular function in your company instead of the company itself wasting time and resources to carry it out by themselves. 

One of the lesser considered outsourcing practices is payroll outsourcing. As it falls under the Human Resources and Finance departments of companies, this critical financial process is always limited to in-house surveillance. All companies go to great lengths to keep financial transactions under their wing. But at what cost? Although there’s a lot of denial when it comes to expenditure, these hidden costs do see daylight when you open your ledger to add it all up.

If you haven’t outsourced payroll, here’s what you’ll be paying dearly for:

Your Own Payroll Department
Having your own payroll department may sound like a necessary indulgence but couple that by hiring a senior team member with domain expertise and it will cost you the moon and back. Some companies hire even less staff indicating cost-effective resource management only to make matters worse when the only payroll accountant they’ve hired quits and leaves the department just ahead of pay day. 

Proprietary Software
If payroll is close to your heart and you want to run it internally in your own company, then be ready to shell out for proprietary software which is as good as any sizeable investment your company makes. Once you get your required technology on board, be ready to spend more money hiring, training and re-training staff every few months to manage that software. One of the additional hassles is to spend on infrastructure and owning protection tools to safeguard your software. To illustrate an example, if you spend MYR 700,000 capital expenditure on buying a reliable software, outsourcing your payroll to an external partner will cost you the same money after you’ve used their services for 25 years! That means not only do you get to use premium payroll software, you also get it for a much lower cost under the supervision of seasoned payroll experts. 

When Penalty Hits You Like a Tonne of Bricks
Misfortune always comes when you least expect it. The consequences are even more harrying when it comes from a government regulator for non-payment of dues or filing errors, both of which can have paralyzing effects on your operations and reputation. Don’t count on your lone payroll accountant to keep tabs on tax submission dates and statutory payment timelines when there is a heap of work to do otherwise. A small slip of the mind may seem small until it goes unnoticed and builds up later as a colossal fine or error in your payroll ledger. At Propay Partners, a few well-known brands have approached us asking us to look into their payroll registry to fix payroll errors that have been overlooked for years!

Excel, Pay Slips & Cyber threat
While digital transformation is dominating the future of work, there are still many (not a handful, but many) companies that run their payroll on Excel sheets and print physical pay slips for their employees. The risk of running your payroll on Excel happens when files go missing or get deleted. Without proper backup or security firewalls, it is easy to present your financial data as an easy target for cybertheft. And once there is a breach, fixing that would literally cost the company more than the actual damage itself. According to a report, cybercrime would be the third-largest economy after the US and China, making it the most profitable business than all the world’s illegal drug trade combined. Pay slips are additional hassles and printing them every month costs more money compared to having your outsourcing partner do it for a cheaper rate as they do it for many clients in one go. 

So Why Outsource Payroll?
To bring down costs, yes. But also, to ensure payroll continuity in the face of crises, mergers and acquisitions, company site relocation or even employee transfer. Outsourcing your payroll can get you an additional pair of eyes to look at your payroll ledger at no extra cost and yet keep you out of the regulator's scrutiny. It’s also uncommon to find payroll experts in all companies. Outsourcing payroll ensures that you have the best payroll talents looking into all your payroll, taxes, insurance data and other allowances with precision and care. They also alert you in case of missed statutory payments or submissions for all your employees. This way you stay protected from all kinds of penalties and warnings. 

Propay Partners is a payroll and employee mobility solutions company that has been outsourcing payroll solutions for the last two decades. We work with global MNCs in Malaysia to enhance their payroll experience at all stages of the employee lifecycle. To know more about our services, visit us at

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