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Payroll Outsourcing VS HRIS Software, Which One Is Better?

Payroll outsourcing services might not be a common thing in Indonesia. However, it can be very useful to the company.

Additionally, managing employee payroll is a time-consuming and difficult task. Having so many components and various regulations relating to the employees’ salaries, payroll calculations are very prone to error.

Companies often rely on payroll outsourcing services to make the payroll process more efficient in order to prevent such situations.

So, what is payroll outsourcing and how is it different from HRIS software that provides comprehensive payroll management features? Let’s discuss it in the article below.

What Is Payroll Outsourcing?

payroll outsourcing service

In short, payroll outsourcing involves the processing of employee payroll by a third-party provider rather than by the company directly.

Later in the process, the service provider will handle all administrative needs related to employee salaries, including salary calculation and payment to all employees.

As a matter of fact, companies use payroll outsourcing services because doing it themselves will be time-consuming and inefficient.

The existence of an automated process from payroll outsourcing service allows HR to focus on other jobs that are more strategic to grow the company.

Payroll outsourcing from third parties usually includes several services, such as:

  • Salary calculation and its components
  • Allowances calculations
  • Income tax reduction (PPh 21)
  • Employee salary payment

Disadvantages of Manual Payroll Process

First, let’s talk about manual payroll process. Many businesses still face a number of problems when they carry out their payroll process manually, such as the time-consuming process that prevents the company from focusing on other important tasks.

However, there are still some other drawbacks that need to be taken into consideration for the company. Like any other job, how well a payroll process is run will depend on who runs it and what their methods are. As a result, there are times when employees are affected by erratic payrolls and miscalculations.

Some of the Advantages of Payroll Outsourcing

payroll outsourcing service

Payroll is a time-consuming job, but its role is very crucial in the company. In some conditions and in the long run, using a payroll outsourcing service might be a more economical and convenient option. Here are some of the advantages.

1. Have plenty of time to focus on business

No matter how many employees you have, maintaining employee payroll requires time and accuracy. Therefore, delegating your payroll process to third parties can be a strategic step.

This is important because the time you save can be used to create business strategies, increase sales, and also grow the business. Increasing productivity should be more your focus.

2. Keep employee salary information confidential

If you manage your company’s payroll manually, there will be a risk that some employees will have access to all employees’ salary information. This employees’ salary information could be leaked to other employees. As a reminder, employee salary information is sensitive and confidential.

When you use a payroll outsourcing service, employee salary data will be stored on a third party server. So, it is extremely unlikely that anyone in the company will be able to find out about the salary information of other employees. This will avoid potential conflict that could occur in the office.

3. Minimize errors

As mentioned earlier, errors in payroll calculation can cost a lot of money for the company. Not only can it conflict with Indonesian regulations, but it can also negatively affect your employees.

In other words, if you want your employees to be happy, make sure that they are paid on time and that their salaries are calculated correctly.

By using payroll outsourcing service, you can ensure that each employee’s salary, their salary components and compensation, and reports can be done accurately according to applicable laws and regulations in Indonesia. Last but not least, the service provided will ensure the deliverable can be done on time.

Disadvantages of Payroll Outsourcing Service

Despite the many advantages of using an outsourcing payroll service, there are still some drawbacks that users have to deal with.

Using payroll service can save costs upfront, but if it lasts for a long time this will be an ongoing additional cost that you will have to pay to a third party.

Indeed, to train and recruit employees who take care of payroll processes will cost a lot. However, the employees that you have will be an important asset in the future.

By training them properly, they will develop their skill and will later be needed in higher positions. Plus, now there are a variety of easy-to-use payroll software.

Errors can also occur because you choose the wrong vendor that is not up to standard. It’s because you do not have full control over the payroll process when done outside the company.

The next problem that is often encountered when outsourcing your payroll process is third parties who are not careful in seeing important information that could be missed when calculating payroll.

Payroll is one of the company’s biggest expenses, so you can’t let a slight error occur in the process because if it is wrong, the costs in the future will be even greater.

Payroll Process From HRIS Software, a More Efficient Alternative

Taking care of the payroll process manually, will certainly take a lot of time. However, there is a practical and efficient solution to facilitate the payment of employee salaries, which is by using cloud-based payroll software such as Mekari Talenta.

Mekari Talenta’s is a cloud-based HRIS software that allows HR to process payroll automatically from calculation, payment process, to reporting.

Using Payroll feature from Mekari Talenta, HR can calculate employee salaries automatically because it can be integrated with the existing attendance system so the process is much faster. In addition, employee salary payments can also be made quickly to different bank accounts.

Considering that the salary components in Indonesia can vary, Mekari Talenta’s Payroll feature has followed the most updated Indonesian government regulations so you can calculate payroll precisely.

To make HR easier to operate, Mekari Talenta also provides training in how to use the application so that HR can be more proficient in managing payroll with Mekari Talenta in a short time.

Using payroll software from Mekari Talenta is also more cost-effective and can be adjusted based on the budget and number of employees. This low price is certainly worth the time and also the efficiency that will be felt by the HR team compared to manual processes.

Coupled with other HR function features that are integrated in real-time, Mekari Talenta will make it easier for HR to manage HR administration more accurately and quickly.

If you are interested in finding out more about Mekari Talenta, you can try the demo application for free by registering your company in this form. Feel the ease of managing your payroll process with Mekari Talenta.


PUBLISHED23 May 2022
Jordhi Farhansyah
Jordhi Farhansyah