Payroll costs: How much does it cost to outsource in 2024?

Payroll costs for 2024: How much does it cost to outsource my payroll?

Author: Simon Bradbury, Global Payroll Consultant and CEO at Global HRIS

Last updated: 03/03/2024

Running payroll can be expensive, complicated, and time-consuming. There are lots of legal requirements to consider, with serious financial risks if you get it wrong. From the type of software to running reports, payroll costs all add up.

Most businesses use external providers to avoid the hassle of handling payroll themselves. Outsourcing your payroll has lots of benefits. It can improve data security and provide you with regular support. However, choosing a provider can be expensive. Payroll costs can get expensive, especially for services not covered by your chosen package.

There are two types of outsourced payroll, each with different costs. Many providers offer multiple tiers of service, such as part or fully managed solutions. So, it’s important to choose the right type of outsourcing for your business needs.

Here we share an estimated cost of outsourcing your payroll, along with the hidden costs you need to watch out for.

Payroll costs: Different types of outsourced payroll

Firstly, it is difficult to determine the exact cost of a payroll service. The average cost will depend on the number of employees, and the type of service you need.

There are two ways to outsource your payroll: a fully managed service and part-managed payroll. Most businesses choose a fully managed payroll service. It is efficient and takes the pressure of payroll off your internal teams. A fully managed service means your entire payroll function is handled externally. Your chosen provider will provide payslips for your employees. They will also work with your country’s tax authorities. This means your payroll will be compliant. Your provider should handle any queries, too.

Alternatively, some businesses choose to outsource some parts of their payroll. A part-managed payroll means certain areas of your payroll are handled externally, whilst others remain in-house. The exact payroll cost of a partly managed service is hard to determine. As well, some businesses chose to audit their payroll – this can be useful for compliance. We’ve put together a handy payroll audit checklist – for any businesses who are considering this option.

Part-managed payroll may seem like the cheaper option. However, it can end up costing you more. Remember to account for internal costs if you keep your payroll in-house. For example, any employee costs, internal training, and payroll software. All these payroll costs can soon add up. On the other hand, completely outsourcing your payroll can be costly, but it is efficient.

As a business, it’s your duty to choose the right payroll option for you. Payroll costs will vary, as your company has unique requirements. Firstly, you should have a list of non-negotiables you need from your provider. Secondly, find a provider that fits in with your business. For example, you must decide whether to completely outsource or keep some parts within your business.

You must carry out your own research, too. Find a payroll provider that has experience, offers round-the-clock support, and can confidently answer any questions you have. Most importantly, they must be transparent about payroll costs.

We’ve rounded up the largest global payroll providers in 2023, too.

Outsourced payroll: Hidden costs to watch out for in 2024

Setup fees

Some payroll providers charge a fee to get your payroll started. This charge is a one-time fee and could be an unexpected cost. Be mindful of any setup fees, as you will have to pay it before setting up your payroll.

Ask any potential provider for an estimated overall cost. Any reliable and experienced provider will share the costs of setup fees beforehand.

Change requests

Your payroll team often won’t be involved in agreeing the contract with your new provider. As a result, your contract may not cover some services or modules that you require from your new system. For example, your team may require a custom General Ledger file for their account. Adding additional items can be expensive, so watch out for these hidden charges.

Payroll systems need to change and adapt without compromising on compliance. You’ll be charged for any changes to your configuration once you’ve set up your payroll. Change requests are often beyond the scope of your initial agreement – you will have to pay for the extra resource.

End of year fees

Your payroll must be submitted to your country’s tax authorities, often monthly or at the end of each year. Your payroll provider may charge you for this processing, so you must ask about any additional fees.

End of year processes will likely be managed by your provider, regardless of if it’s fully or part managed. Smaller day-to-day tasks are kept in-house. For example, updating employee records and submitting pay-runs.


Payroll reports can be very useful for businesses, but the price can vary depending on what report you need. Your provider can share a lot of useful information for your business. For example, employee-specific reports and payroll tax summaries.

Some payroll providers include reports in their standard package.

Broken contracts

When you sign a contract with your chosen provider, it’s worth checking for any fees for breaking a contract early. Most will have a set fee if a business breaks the contract early.

To avoid these hidden costs, look for a contract that offers a shorter period. Alternatively, find a provider that offers a break clause halfway through your contract. Or look for a provider where you can cancel the service with no penalty.

How can Global HRIS reduce your payroll costs?

Firstly, we only employ payroll consultants who have experience of working for a payroll outsourcer. This in-depth knowledge is crucial to helping our clients and delivering a payroll solution. For example, our team understand how providers structure their contracts and calculate their fees.

Choosing a payroll provider is a lengthy, time-consuming process. As a business, choosing a new provider is a huge task. They must fit in with your values, meet your unique needs and understand your processes. A request for pricing (RFP) allows you to compare features and the cost of different payroll providers. We will work with you to find the right solution for your business.

Once you’ve found your chosen provider, we will ensure your payroll transition is as smooth as possible. We have lots of experience in managing global payroll projects. From stakeholder management to summarising your requirements, we’re here at every step of the way.

We’ll also manage your data migration. This means your data will be correct and compliant. Whether you’re a global enterprise or a small business, we have the skills to help your business.

Most importantly, we’ll test your payroll. This is the last step in your payroll journey: it ensures your payroll is accurate and error-free.

Find out how we can help you today.

Find out more about how we can help you by calling Global HRIS today on +44 161 317 2903 or get in touch through our website.
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