Payroll outsourcing in Kenya refers to the practice of hiring an outsourcing firms i.e. MGK Consulting Ltd to handle all aspects of an organization’s payroll process, including calculating and distributing employee salaries, paying the taxes, and maintaining accurate employee records.
Benefits of payroll outsourcing
- Cost savings: Outsourcing payroll can be cost-effective compared to hiring or setting up an in-house payroll department which is expensive.
- Business continuity – Hiring some personnel could affect the business continuity when separation occur and the personnel decides to withhold some details from the management.
- Time savings: Payroll outsourcing allows organizations to redirect time and resources to other core business activities.
- Improved accuracy: Third-party payroll providers have the expertise and technology to minimize errors in payroll calculations.
- Compliance: Outsourced payroll providers keep up-to-date with changing tax laws and regulations, reducing the risk of non-compliance for the organization.
- Scalability: Payroll outsourcing is flexible and scalable, making it a good option for businesses of all sizes.
Drawbacks of payroll outsourcing
- Loss of control: Organizations may lose some control over the payroll process when outsourcing. But they still have the overall approval of monthly payroll reports.
- Dependence on provider: If the outsourcing company experiences any problems, it could negatively impact the organization’s payroll process.
- Confidentiality concerns: Some organizations may be hesitant to share sensitive employee information with a third-party provider and salaries may leak to unwanted parties.
In conclusion when deciding whether to outsource payroll, organizations should carefully weigh the benefits and drawbacks, and choose a reputable and experienced provider.