From content creation to software development, many services today can be outsourced to a third-party company. As surprising as it seems, businesses can outsource payroll and have every right to do so. On average, 120 hours are dedicated each year for payroll alone, according to G2. For a business owner like yourself, that’s a lot of time!
After all, payroll is a complex process of not just calculating your employees’ monthly salaries and factoring in their overtime pay, taxes, and benefits. It is also ensuring that all calculations are error-free and payslips are received by employees on time. Businesses that outsource payroll enjoy lower labor and overhead costs and more streamlined payroll processing.
If outsourcing payroll to the Philippines sounds daunting, this detailed guide gives you a glimpse of the country’s culture and outsourcing industry. Later, we’ll teach you how to outsource payroll to an outsourcing company.
FAQs On Working With A BPO to Outsource Payroll
Payroll is essential in every business, but it is also a time-consuming process. Typically, companies have in-house payroll specialists who take care of payroll processing. Because some companies lack the resources to employ specialists, they outsource payroll to BPOs for high-quality services without the added cost of hiring locally. Below are five common FAQs businesses have when they outsource payroll to the Philippines.
FAQ #1: How’s the Philippines’ Data Privacy and Protection?
From the names of employees to bank account numbers, payroll processing involves working with personal data. Given the surge in data breaches in 2023, data protection remains a top priority for companies who plan to outsource payroll.
Thankfully, data privacy and protection are taken seriously in the Philippines. The country’s Data Privacy Act of 2012 — or Republic Act no. 10173 — underscores the need for organizations to ensure sensitive data is safeguarded from unauthorized access and disclosure, lest they face fines and imprisonment.
FAQ #2: Are the Services Expensive?
The country has a lower cost of labor, making payroll outsourcing to the Philippines a cheaper venture than employing in-house payroll specialists. However, outsourcing rates may vary between BPOs as they factor in the salary of payroll employees — which depends on their skill level and experience — the cost of employee benefits, taxes, and many more.
FAQ #3: Will I Face Communication and Linguistic Difficulties?
Not at all! Filipinos are fluent in English. They’re exposed to the language through media and the country’s education system — where most subjects are taught in English. As such, Filipinos can write like native English speakers and communicate with a neutral accent. They’re also knowledgeable in common English slang and idiomatic expressions.
FAQ #4: Can Filipinos Work With Western Clients?
Indeed, they can. Many BPOs in the Philippines have worked with clients in different countries, such as the United States and the United Kingdom. Since the Philippines is a melting pot of Eastern and Western cultures because of its colonial past, you won’t face cultural clashes with your offshore Filipino team when you outsource payroll.
FAQ #5: Can Filipino Employees Adapt to My Country’s Time Zone?
Yes! Because BPOs operate 24/7, Filipinos can adapt to your company’s working hours to ensure real-time payroll processing and timely delivery of payslips to employees. When you outsource payroll to the Philippines, you won’t have problems holding virtual meetings and exchanging correspondence with your Filipino team.
Outsource Payroll to the Philippines In 6 Steps
Step #1: Identify Your Company’s Payroll Needs
Your plan and decision to outsource payroll to a BPO depends on your current company’s payroll workflow and needs. Before you draft a contract and outsource payroll to the Philippines, make sure you have clear answers to the following questions:
- Do your payroll specialists frequently commit errors due to manual entry?
- How often do your payroll specialists struggle with managing payroll records?
- Do your employees complain about late payments?
- Have there been instances of inaccurate payment calculations?
- What makes your company’s payroll processes too complex?
Whatever your answers to these questions, they give you an idea of which payroll tasks you need to outsource to the Philippines and help set expectations for your future outsourcing partner.
Step #2: Write An Outsourcing Contract
A contract is always a must when you outsource payroll to the Philippines. It is a document outlining the responsibilities of your business and the BPO company, so both parties know what to expect from each other during their partnership.
List down the scope and limitations of the payroll services you’ll outsource, expected deliverables, and turnaround times. Include the performance metrics in your contract’s service-level agreements (SLA) clause to give your outsourcing partner an idea of how their payroll employees’ performance will be assessed.
Furthermore — in addition to the implementation of security measures and compliance with data protection laws — the data protection and privacy clause must have provisions for the storage, return, and destruction of employee data. Finally, the termination clause includes the conditions and circumstances for ending the partnership.
While writing a contract from scratch is intimidating, you can look up templates online and use them as a reference. Before looking for a BPO to outsource payroll services, consulting a legal professional is recommended to ensure every clause is written clearly and there are no potential conflicts of interest.
Step #3: Find A Company to Outsource Payroll Tasks
Searching for the right BPO to outsource payroll projects is like scouting for the most qualified candidate for a role — it takes time and vetting. If you have a LinkedIn account, ask your network if they know a BPO you can outsource payroll services to. Don’t just stick to LinkedIn, though. Do a Google search for the best BPOs or the top payroll outsourcing companies in the Philippines and read the articles at the top of the search results.
If you’ve found a couple of Philippine-based BPOs you can outsource payroll to, do a thorough background check of each one. Browse their official website for portfolios, case studies, and client testimonials. All these paint a picture of how a BPO processes payroll and works with sensitive employee data.
If the client success stories on a website don’t convince you enough, you can take it a step further by reaching out to an outsourcing company’s previous clients. This method is the most holistic and foolproof way of vetting a company to outsource payroll projects. You can ask the client about their experiences with working with their offshore staff as well as the strengths and weaknesses of their outsourcing partner.
Step #4: Inquire and Close the Deal
At this point, a few of the BPOs you plan to outsource payroll passed the initial screening. Now, it’s time to inquire and schedule a meeting with your soon-to-be outsourcing partner. Articulate the scope and goals of your payroll projects, and use the meeting to gauge your compatibility with the company. If possible, request a trial period to assess the company’s performance in delivering payrolls.
Unfortunately, not all initial meetings end in contract signing — either there’s a mismatch in values and goals or the BPO doesn’t have enough manpower for your payroll projects. Keep searching and inquiring until you close a deal with a company to outsource payroll.
Step #5: Work With Your Filipino Payroll Specialists
Welcome your offshore payroll specialists like you would welcome a newly hired in-house payroll specialist. Introduce your company’s payroll processes and payday schedule, inform your new team of your country’s federal or national holiday pays, and provide them access to employee information — including their timesheets, bank account name and number, benefits, overtime, incentives, and PTOs (personal time off).
You can also share your business’s payroll software and provide training materials on how to use it. This way, your Filipino team can accurately calculate your employees’ paychecks using said software and reduce payroll errors when you outsource payroll tasks.
Step #6: Monitor Your Team’s Performance
Payroll performance is key to streamlining payroll operations and making employees happy. Use performance metrics to assess whether your Filipino payroll specialists meet your expectations. You can answer these questions too:
- How accurate are your team’s calculations?
- Are leaves, overtime, and incentives included in the calculations?
- Are the payslips delivered on the scheduled payday?
- Based on your team’s performance, do you still want to outsource payroll or terminate the partnership?
In processing payroll, there’s always no room for mistakes so make sure feedback is provided to reduce inaccuracies and errors.
Outsource Payroll to KDCI Today
It’s easy to neglect the intricacies of payroll processing. Payroll specialists calculate not just the hours rendered in a day, but also overtime, absenteeism, incentives, and PTOs. From slashing costs to streamlining payroll processes, businesses outsource payroll for many reasons. Thankfully, there are plenty of BPOs in the Philippines that companies abroad can outsource payroll to. One of those BPOs is KDCI.
KDCI onboards payroll specialists with an eye for detail and excellent mathematical skills. In addition to their nuanced understanding of payroll laws to ensure legal compliance, they can juggle multiple tasks and safeguard employee information. With the help of AI, we can optimize your business’ payroll workflow and ensure employee satisfaction across the board.
If you’re looking to outsource payroll in the Philippines, KDCI has what it takes to take your business’ payroll processing to the next level.
Want to outsource payroll and kick off your outsourcing journey with a bang? Contact us and start building your finance and accounting team now!
