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There are many ways to process payroll. Essentially, we look at 3 other methods – Manual Processing, On-premise Software, Payroll Outsourcing
Due to the affordability of SaaS payroll, there is no longer any doubt that manual payroll processing with Excel spreadsheet is an outdated practice. Compared to on-premise enterprise software, SaaS payroll software vendors offer reduced software cost, pricing flexibility, lesser implementation time and save the customers the hassle of updating the software themselves. Compared to payroll outsourcing, SaaS software is more affordable as a self service model.
Let’s explore the key drivers behind the growth of SaaS payroll, compared to these other more traditional payroll processing solutions.
As old as the Internet itself, many companies actually started off with payroll processing using Excel in the past, and even now. Using spreadsheet is useful for sole proprietors and when the company is a small startup, or sometimes when the company is family owned which involves a few family members. They may not even need a payslip!
As companies start to scale up and become more complex in operations as well as human resources, there is no doubt a need to automate and optimize payroll processing. For companies with more than 3 employees, the benefits of using SaaS payroll software should outweigh its cost. Although not free, SaaS payroll eliminates the monthly mundane task and manual calculations. SaaS payroll providers also keep track of provident fund rate changes, comply with local regulations and send notification reminders so companies can pay their employees on time.
Read more about the best practices to process payroll manually.
Before SaaS payroll takes centre stage, mid size corporations and large MNCs often have their payroll software installed as on-premise enterprise software. Companies need to spend on upfront capital investment to purchase these software products, install, maintain and update the software on their own. This is less efficient compared to cloud based software (SaaS) whereby software installation is not needed, and the vendor will do all necessary software maintenance. They charge the customers a small subscription fee for using the software based on number of employees.
With a Pay-As-You-Go subscription model, pricing becomes flexible and more justifiable. SaaS payroll providers typically charge for their software/services based on Per-Employee-Per-Month (PEPM).
The rise of a more digital savvy workforce and SaaS providers simplifying their payroll software for easy onboarding help to fuel the growth of SaaS payroll. Implementation time is greatly reduced so what used to take days just for onboarding and training to start using the software may now be reduced to hours.
Enterprise Payroll software is often expensive, and the smaller companies find themselves priced out of this option. With the SaaS model, these plenty of small companies and startups can also enjoy productivity gain by automating payroll processing using software.
Hence, The SMEs represents a huge market that would benefit from SaaS payroll solution.
For larger enterprises (typically more than 100 headcounts or MNCs with multiple locations), there is another popular option to consider, which could be managed payroll service or payroll outsourcing. With payroll outsourcing, companies reduce the need to hire and train in-house payroll staff. Similar to SaaS software, local compliance is taken care of by the outsourcing vendor.
This end-to-end managed payroll services comes with a higher price but clients can often enjoy high quality professional services without dealing with payroll complexities at all.
APAC is the fastest growing and most dynamic economy now. It is also a diverse region with different languages, cultures and economies. Driven by robust growth, payroll providers of all kinds establish footprints in different market segments. Yet there are hardly dominant players that can thrive in all locations.
With all the funds pouring into SaaS payroll startups, these companies are in the news. The big reasons for the rise of SaaS payroll comes with its cost, flexibility, reduced implementation time & ease of use.
As companies big and small start to embrace SaaS payroll, it is indeed an exciting era for existing SaaS payroll providers and the newcomers.