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Topics: Accounting outsourcing, benefits of outsourcing, outsourced accounting services, payroll, payroll outsourcing

Challenges of Payroll Outsourcing for CPAs and Ways to Overcome them

6 MIN READ | Posted on June 14, 2022
Written By Divya Ramaswamy

Challenges of Payroll outsourcing

Payroll outsourcing offers excellent benefits apart from the opportunity to save money and time, such as shifting your focus towards business growth and long-term goals. It helps better manage and allocate your employees’ time and helps maintain a happy workplace. Whereas an in-house payroll team can have many drawbacks, CPA firms tend to rely on a third-party service provider to handle their payroll tasks.

If you have considered payroll services, you need to be aware of the challenges you might face even when choosing to outsource and know what to look for and how to overcome them.


When you are new in the process of outsourcing, you might find it challenging to maintain proper communication with your outsourcing provider. Maintaining a robust communication line between both parties involved in payroll outsourcing is essential. Without effective communication, smooth delivery of payroll services cannot be achieved. There are language and cultural barriers and an increased chance of inconsistent communication with your payroll outsourcing partner. The communication barrier remains one of the most common yet critical challenges faced by companies that outsource. It could lead to several issues, especially in the case of payroll outsourcing. While facing language and cultural barriers, you might sometimes fail to focus on innovation and attention to detail pertaining to the outsourced tasks.

Solution: This challenge can easily be avoided upon choosing a global outsourcing provider whose personnel can communicate in English or other preferred languages, enabling better communication. To maintain a strong communication loop with your provider, you must have discussed with them beforehand and get all the necessary clarifications you need. That can be ensured by choosing a payroll outsourcing provider equipped with advanced communication software and tools that help preserve a healthy interaction.


Data security and confidentiality are two critical components of payroll outsourcing, and payroll processing errors and security breaches can have long-term consequences. Outsourcing your payroll to a third-party provider involves sharing your business’s payroll information, and the biggest challenge is safeguarding its confidentiality. The last thing you might hope for is the misuse of your payroll data or unauthorized persons or competitors accessing such sensitive information. Data insecurity refers to unauthorized, accidental, or illegal access to data. Any unauthorized access to information- whether copied, lost, altered, mishandled, or destroyed- clearly indicates that your data has been compromised. Failing to choose an outsourcing provider that isn’t reputable or doesn’t have policies to protect your data can cost you losing your sensitive payroll-related data. Therefore security breaches are crucial to worry about when you are deciding to hand over your payroll information to a third-party service provider.

Solution: You can solve this problem by simply verifying the security level your payroll outsourcing partner maintains. An ideal payroll outsourcing provider has various security technologies and measures and has safe practices while interacting via different communication channels. It is best to cross-check the encryption and security monitoring methods your outsourcing provider uses. Outsourced payroll services are designed with state-of-the-art technology to help ensure data protection and prevent fraud. When you outsource your confidential payroll data to a provider with a data protection facility, the constant threat of data security breaches can be forgotten.


Remaining compliant with the rules and regulations is crucial for every business entity. The persons dealing with the payroll system should be aware of the tax laws and employment regulations and be updated with all the changes. Compliance and calculation errors can be a nightmare and lead to delays in paychecks, and frequent mistakes can even put you at risk of penalties. Compliance concerns have been one of the main inhibitors preventing firms from outsourcing their payroll.

Solution: Partnering with Global payroll outsourcing service providers that take data security very seriously and are SOC 2 Type II compliant can help you address this challenge. We now have compliance-friendly payroll models thanks to improved technology, increased familiarity with the shared service center concepts, and the rise of global outsourcing providers. Organizations that outsource payroll to fully compliant global outsourcing providers are now more confident that their providers can ensure compliance for every active jurisdiction.


Payroll accuracy and timeliness are among the most important factors to consider while shortlisting your outsourcing partner. You might be wondering if your chosen payroll outsourcing service provider would be offering your real-time and accurate reporting or not. Getting that would enable retrieval of crucial and sensitive data quickly and with lesser human involvement and will also help with resolving compliance issues and audits.

Solution: While dilly-dallying to opt for payroll outsourcing services, choose a reputable name and don’t shy away from checking their delivery standards, the technology they use, and availing free demos. Partner with the one that deploys innovative and robust tools, especially if they offer cloud payroll services that can help you easily retrieve data on a real-time basis. With QXAS, you can track outsourced tasks on the go and stay up-to-date all the time!


Cost reduction is the main reason why companies opt to outsource. But it will not be cost-effective if you don’t choose the right vendor and compare your in-house team’s cost estimates. Moreover, some outsourcing companies can charge you for additional expenses such as software upgrades, troubleshooting, redeployment, etc., and can add up to your original budget. Such hidden and unforeseen costs can cost you more than what it takes to maintain an in-house payroll team, and outsourcing can be a wrong decision.

Solution: Choose the right payroll outsourcing provider, communicate with them, and ask for a transparent cost estimate before making the deal. Defining the project requirements and your budget can help you make the perfect cost estimate for outsourcing.

Must Read: The Ultimate Guide for CPAs to Decode Payroll Outsourcing Services

The Bottom Line

If you are new to outsourcing your payroll, you might face some challenges initially. But it can all be minimized if you select the right payroll outsourcing provider to take care of your firm’s payroll. The most challenging part is choosing a highly experienced and reliable outsourcing partner with a data protection system equipped with the latest equipment and personnel who can communicate well in your preferred language. It is better to define your outsourcing requirements properly and set goals before starting outsourcing and selecting your service provider. Effective communication is one of the most efficient ways to set proper goals. It is important to double-check your project requirements and convey the same to your outsourcing provider so that you are both on the same page. Suppose you spend some time and research well while shortlisting your outsourcing partner. In that case, you will soon find yourself in a better place and experience cost-efficiency and other benefits of payroll outsourcing.


QXAS is the one-stop destination for CPA firms in the US looking for a dedicated team of highly experienced accountants who

  • can smoothly manage payroll
  • takes care of local taxes, laws & compliance,
  • guarantees data security
  • has a well-equipped with a user-friendly platform & a transparent pricing structure.


  • 14 + years of experience delivering outsourced payroll solutions to clients across industries & geographies
  • With specialization in catering to high-volume payroll processing requests, our team of experts has processed over 1,000,000 timesheets annually
  • First GDPR compliant payroll outsourcing company in India which is also affiliated with prestigious accountancy organizations like ACCA & ICAEW
  • Fully compliant with ISO 27001 for information security and ISO 9001 for quality
  • A highly trusted and successful Payroll outsourcing company with highly efficient, resolute, and experienced accountants

Book a Consultation

We hope you enjoyed reading this blog.  Payroll outsourcing in the US has never been easier as QXAS is ready to offer numerous benefits. Get in touch to learn more.


Originally published Jun 14, 2022 07:06:47, updated Jul 07 2022

Topics: Accounting outsourcing, benefits of outsourcing, outsourced accounting services, payroll, payroll outsourcing

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