Why Employers in Singapore Should Outsource Payroll Processing

With the advent of technology, companies are increasingly looking at ways particularly payroll outsourcing to leverage and improve their business efficiency and productivity. In the area of human resource management, outsourcing payroll is one activity which provides a clear benefit in human resource practices.

Below are several reasons why companies should consider outsourcing their monthly payroll process to professional payroll service providers.

Increasing complex and constantly changing rules on salary calculations

In Singapore, employment laws relating to calculation of salary payments, payment process and central provident fund contributions for different age groups etc are constantly revised and updated. In addition, there are various types of government-funded claims and reimbursements such as national service claims, child care claims, paternity and maternity claims. The work would involve making the correct online application for reimbursements and refund back for employees who are entitled to these claims.

There are also substantial government funding available for employee training under the various Skills Future programs. However, the employer must make a prior application for approval for eligible employees and make the necessary claims after the employees have successfully completed the training.

Professional payroll outsourcing managers must constantly keep abreast of changes and ensure correct calculation and accurate figures are used for payroll processing each month. You must also be able to answer your employee’s queries about their payroll confidently and clearly.

Independent verification and better reporting requirements

Payroll outsourcing and processing companies provide a wide array of payroll reports for management reporting purposes. Using more advanced payroll software, various levels of reports can be produced depending on clients’ requirements.

Payroll outsourcing companies are able to provide specific & ad-hoc reports for your various accounting or management requirements quite quickly.

Direct access to payroll experts

Payroll processing companies are staffed with specialised and knowledgeable payroll staff who are able to attend to your employee’s queries and can act as a single point of contact for your employees.

Depending on the number of headcounts, payroll outsourcing companies can assign dedicated staff for their clients.

Payroll experts keep themselves abreast with the changes to the CPF rules, taxation and your employee benefit programs. Most payroll outsourcing companies conduct in house training or send their staff for external training so that they are well trained and skilled in serving the needs of their clients.

Freeing up management time to focus on core business activities

One of your main reasons for outsourcing to a specialist payroll service provider is that it frees up time and resources for key staff to concentrate on strategic human resource management areas such as recruitment, retention and staff performance that have a deeper impact on business performance and profitability.

Cost savings

It is increasingly getting difficult to recruit and retain a full-time in-house employee to manage companies payroll. As payroll is a sensitive matter, each time an employee leaves, a lot of management time is expended in ensuring that there is proper hand over to a new employee.

When payroll processing is outsourced, there is no such issue as the payroll outsourcing companies would have a team of employees to handle the payroll processing. When an employee leaves, there would likely be a seamless transfer of work and responsibilities to another payroll staff.

Unless the employee headcount is more than 50, it is perhaps not economical to hire full-time staff to handle employee payroll. Payroll outsourcing companies probably can offer a much lower cost than in-house staff. For companies with small and few headcounts, it would definitely more cost advantageous to outsource their payroll processing.

Management and general office administrative staff that are often entrusted with payroll processing for small companies can be deployed to take on other responsibilities such as customer service or take on strategic human resource management responsibilities which would have a greater impact on the success of the company.

Internet Cloud Technology Efficient Payroll Process

With better payroll software technology, payroll outsourcing and staff outsourcing companies are able to provide an up-to-date, timely, and more efficient service and support to clients. Access to Individual payroll files for each employee and computation all the salary and reimbursements can be done faster and managers and clients can have access to this information almost instantly with internet access. Printed or electronic pay advice via the internet can be generated and delivered to each employee, and annual bonus, increments etc. via email or can be accessed by employee anytime and anywhere on mobile or desktop.

Employees can be provided with individual online access to their payslips and with an e-leave option, they can also make application for leave via online.


Given the advantages mentioned in this article, it is crystal clear that forward-looking companies should adopt Payroll outsourcing option as part of their business strategies to compete in an increasingly competitive and volatile business environment.

Choosing and working with the right payroll outsourcing business partner or service provider is a critical part of the business outsourcing process.

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