differences between outsourcing payroll and internal payroll in saudi arabia

What are the Differences Between Outsourcing Payroll & Internal Payroll in UAE

Payroll is the cornerstone of every business. Yet many companies could be managing their payroll more efficiently. Experts have determined as many as one-third of employers make costly internal payroll mistakes. If your company is plagued with consistent payroll errors, you may want to consider outsourcing payroll. But which is best for your business? 

Today we will look at the differences between outsourcing and internal payroll in Saudi Arabia.

What Is In-house Payroll?

In-house payroll is when an internal department within a business handles payroll processing for the company. The staff who process payroll in-house are company employees and are paid through the same system they manage. In-house payroll employees fall within the human resource or financial departments. Typically, an in-house payroll system will:

  • Establish a payroll bank account where funds will be withdrawn to pay employees (either by check or direct deposit)
  • Create a system for tracking hours and managing salaried employees’ pay periods.
  • Schedule payroll (usually every other week)
  • Collect and manage time-keeping data
  • Manage and subtract any required taxes, deductions, and retirement contributions
  • Pay employees

What Is Outsourced Payroll?

Outsourcing payroll processes is when a company hires a third-party company or individual contractor to process payroll. The outsourced payroll process is different from in-house payroll processes. Generally, working with an outsourced payroll system includes:

  • Contract with a payroll provider
  • Payroll provider will process payroll automatically based on timesheets, employee data, payroll taxes, and other deductions
  • Selecting an internal employee to approve paychecks every pay cycle.
  • Authorize final payroll processing

benefits of outsourcing payroll

Benefits of Outsourcing Payroll

When most companies think of outsourcing payroll services, they automatically associate it with reducing labor costs. From paying an internal staff to manage payroll and managing monthly payroll subscriptions to distributing payroll and navigating local payroll regulations, an internal payroll system is extremely costly. However, in addition to significant cost savings potential, outsourcing payroll operations can be extremely beneficial.

  • Simple setups: One of the main attractions to outsourcing payroll is found in the simple setup process. Since payroll company systems are already established for payroll processes, all a company needs to do is provide their company’s information and take a step back. At the same time, in-house systems take significant time to establish and manage over months and even years.
  • Streamlined process: Outsourcing payroll allows a company to seamlessly integrate various HR processes, such as scheduling and managing benefits, while simultaneously freeing HR staff to focus on other essential operations.
  • Compliance: A third-party payroll company dedicates all of its efforts to understanding and managing payroll. Leveraging the power of standard processes, their team adheres to all local and federal laws and regulations.
  • Accuracy: Not only can payroll mistakes damage a business’s bottom line, but they also damage reputation. According to recent surveys, upwards of 41% of employees live paycheck to paycheck. Dedicated payroll providers ensure error-free accuracy when it comes to payroll processing. 
  • Support: In the event of a mistake, a swift response is essential. More often than not, having an expert dedicated to correcting any concern is critical. Outsourced payroll solutions generally include an entire support team and a dedicated payroll specialist to handle any discrepancies.

Outsourcing Payroll with SOURCEitHR

At SOURCEitHR, we take great pride in helping our clients manage their payroll. Our payroll outsourcing solutions are designed to streamline payroll to ensure full accuracy and full compliance. Whether you are looking to switch payroll providers or migrate from an internal payroll system, we can help. Our payroll solutions empower businesses to manage their team from any location using our innovative mobile app and web-based self-service platform. With a wide range of service offerings and the resources to handle your team as it grows and evolves, we can help you streamline your payroll and HR processes today and long into the future. 

karim-mubarak-co-founder-and-managing-partner-at-sourceithr (1)

Karim Mubarak

Co-Founder & Managing Partner

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