What Will Be the Future of Payroll & HR Outsourcing After the Pandemic?

Posted September 20, 2020 by escalonservices

When COVID-19 hit several months ago, many entrepreneurs found themselves working on the front lines of various finance and employment issues, from furloughing staff members to handling payroll tax changes.

When COVID-19 hit several months ago, many entrepreneurs found themselves working on the front lines of various finance and employment issues, from furloughing staff members to handling payroll tax changes. Several operational HR and payroll limitations emerged as the result of the pandemic, especially for small- and medium-sized businesses. As a result, many small businesses recognized that their payroll and HR processes needed improvements.

However, since hiring full-time payroll and HR teams who could offer that kind of support wasn’t an affordable option for most, many companies partnered with a professional employer organization (PEO) for their payroll, human resource and other needs.


As companies are starting to settle into their routines again despite the economic downturn caused by the pandemic, the conversation is turning toward how the world has changed since COVID-19 hit. Businesses, more than ever, have started to look for cost-effective and flexible solutions in the areas of payroll and HR in order to cut expenses for their non-core activities.

In addition, since governments all over the world are putting new measures in place to support the economy and imposing new requirements on employers, the need for compliance has reached a new level of complexity.

This has led to businesses to look at PEOs that can offer such automated solutions as payroll and benefits calculation and administration, pay slip issuance, time and attendance management, on boarding new employees and so on.

Here are three reasons why businesses will continue to seek Payroll and HR outsourcing solutions even after the COVID-19 pandemic:


Cost Savings

Businesses of all sizes have felt the financial burden of the corona virus pandemic. This has led to not only layoffs and furloughs, but also calculated spending cuts in other areas. Going forward, establishing comprehensive payroll procedures and employee leave policies will be essential. However, hiring in-house teams can be time-consuming and expensive. In fact, a study by Paychex shows that reducing expenses is one of the top priorities for businesses right now. In such a scenario, outsourcing these services is an alternative way to help meet such critical needs, while minimizing overhead costs.

Risk Management

Over the past few months, numerous changes have been made to the laws and regulations at the local, state and federal levels, including several new paid leave policies. A range of policies must be updated or created based on these changes before welcoming employees back to work.

Keeping abreast of such changes requires a great deal of time and energy. And by bringing in outsourced payroll and HR experts who are focused on these compliance updates, business leaders can protect themselves by ensuring proper rules have been put into place before reopening.

For example, according to the same Paychex study, 25 percent of companies plan to increase their telecommuting and flexible working opportunities following COVID-19. In this case, an outsourced HR professional can offer guidance and expertise on how to navigate such situations and address them formally by updating employee handbooks. This way, business owners can focus on revenue-generating responsibilities like sales, R&D and account management, instead of spending countless hours drafting policies.


Due to the recent regulatory and legislative changes, a number of obligations have changed, all of which can take a lot of time to update and distribute. For example, if an employee was furloughed, updating the Form I-9 is usually not required. But, if they were terminated and then rehired within three years of updating the last Form I-9, a new Form I-9 or complete Section 3 of their original Form I-9 may need to be updated to indicate the rehire. Also, businesses might have to consider such documents as Form W-4 and direct deposit forms to ensure that the employee is back on the payroll.

And since PEOs are experts at what they do, outsourcing such functions can eliminate potential risks of non-compliance with the changing legislation, statutory requirements and resulting penalties.


The world is looking at a new normal, and business leaders are trying to figure out when and how they’ll be able to bring their employees back to the offices, apart from wondering how they can continue to work toward achieving their financial goals. However, with the right payroll and HR outsourcing partners, they can feel prepared to reopen, knowing that they’re managing costs and implementing the new policy changes effectively.
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Last Updated September 20, 2020