Payroll Process Outsourcing

The concern for cost reduction has become a major factor resulting in the significant growth of outsourcing Payroll and enhancing the existing outsourcing functions by numerous organisations. Payroll process outsourcing has great benefits over administrating it in-house.

The Payroll processing is of high relevance for the organisation salaries, wages, bonuses, deductions, and net pay. It maintains the check system and records the transaction which is of high importance to them. You leverage the administration about which you are carefree.

What is the Payroll Process in India?

Payroll consists of various processes for the calculation of payments to the employee. According to their work for the company, it is required to calculate the overall payment of each employee. Payroll processing is the most effective and used way to calculate the total payment of the employee. After calculating all the mandatory deduction like PF, HRA, DA, etc. HR department process the total pay which should be given to the employees. Each company uses different payroll process in India. Various company or location specific laws are also applied to the payroll calculations. Payroll consists of various non-payment work like payslip generation, disbursal, taxes, etc. Below are all the steps which are included in the payroll process.

Pre Payroll Process

This is the initial stage of payroll processing. The dedicated payroll department has to define the company policies in this. Also, the inputs are gathered by the departments to process the actual salary structure for the month. So, we will discuss everything in details below.

1.Payroll Policies

In this step, the company adheres to the company policies while generating the first output. Various policies like attendance policy, leave policy comes into the play. It is done to completely adhere to the company’s norms.

2.Gathering and Confirmation of Inputs

Once the policies are revised and confirmed. It is time to receive the inputs from the dedicated department. In this step, various payment-related data is received.

Actual Payroll Process

This is the actual payroll process in India. The payroll department does this by following various payroll guidelines. The defined steps are as follows.


In this step, all the taxes and deductions are calculated. These deductions can affect the total salary of the employees. After the calculation, the post payroll process starts.

Post Payroll Process

The post Payroll process is the final payroll processing activity. It consists of various deductions and final payout. The whole detailed structure of post payroll process is given below.

1. Statutory deductions

In this step, all the statutory deductions like ESI, PF, TDS deducts from salary. After fully confirming these deductions, the total amount of payment confirmed. This is one of the most important steps in generating payroll. The company should clearly deduct all the statutory compliance s. Also, it is necessary to inform the employees of all the deductions.

2. Accounting

Before processing the payment, it is required to register everything in the company records. All the transaction and total payment are done to the employees should be visible to the company. A separate payroll accounting department is used for this.

3. Final Pay-out

Depending upon the mode of payment, the company pays the final calculated amount to the employees. Most of the companies give salary accounts to their employees. So, whether the company is doing it with checks, cash or online transactions. The final payment should be given to the employees. This was the whole payroll process in India. Most of the companies use the same process as above.