Navigating the business landscape in Nigeria can be challenging as effectively managing a business involves dedicating attention to several aspects at a time.
However, identifying less strategic tasks and operations and finding ways to handle them efficiently can significantly improve your organisation’s operations.
One important task that consumes time, money, and manpower resources is payroll management. Payroll processing is a time-consuming and intricate task that requires precision, compliance with local tax laws, and a dedicated team.
With increasing pressure to streamline operations, cut costs and focus on core activities, outsourcing payroll in Nigeria has become the go-to for business owners and leaders.
When carefully planned, you can enjoy the benefits of payroll outsourcing in Nigeria almost immediately and leave the complexities of systems and compliance to experts.
Benefits of Payroll Outsourcing in Nigeria
Deloitte’s 2021 Outsourcing Survey Report showed that 80% of organisations outsource their payroll management to third-party providers, making it the most outsourced business process.
With the global payroll outsourcing market projected to reach $19.5 billion by 2031, we’ve identified the top 10 benefits of outsourcing payroll in Nigeria and why it’s becoming an attractive option for businesses.
1. Cost Saving
One of the most significant advantages of outsourcing payroll in Nigeria is the potential for cost savings.
Contrary to popular opinion that processing payroll in-house is less expensive, it involves hiring, training, and retaining dedicated payroll staff, investing in payroll software, and staying updated with tax regulations.
All these can be costly, especially for small and medium-sized businesses (SMEs). By outsourcing payroll services, organisations in Nigeria can allocate resources more effectively and reduce these costs.
payroll outsourcing management allows you to pay a fixed fee to a reputable service provider, eliminating overhead expenses and reducing the need for additional employees.
This is particularly valuable if you’re a startup and growing business aiming to maximise efficiency while minimising costs.
2. Focus on Core Business Functions
Payroll processing is a non-core function that doesn’t directly contribute to your revenue generation. If you’re looking to grow and stay competitive in the Nigerian market, it’s essential to focus on core business activities like product development, service improvement, marketing and sales.
Outsourcing your payroll frees internal resources, allowing your team to direct their energy toward these critical areas.
When the burden of payroll processing is removed from your in-house team, productivity increases, and the business can focus on growth and innovation, ensuring you stay ahead of competitors.
3. Ensure Compliance with Nigerian Laws
Navigating Nigeria’s dynamic tax and labour laws can be overwhelming for businesses, especially smaller ones, without dedicated legal or HR teams.
Payroll experts at Workforce Group are well-versed in Nigerian tax laws, pension schemes, and other statutory regulations. They ensure compliance, reducing the risk of costly errors and penalties.
In addition, we take responsibility for staying current with the latest changes in tax regulations and ensuring that deductions like PAYE (Pay As You Earn) are processed accurately.
For a comprehensive understanding of Nigeria’s tax system, visit the Federal Inland Revenue Service for more information.
4. Reduce the Risk of Errors
Manual payroll processes are prone to error, and even a tiny mistake in calculating employee wages or tax deductions can lead to significant problems. Payroll errors can result in legal issues, employee dissatisfaction, and financial losses.
At Workforce Group, we leverage automated systems that minimise errors and ensure accuracy in calculations. This reduces the risk of mistakes in processing payroll and ensures employees receive the correct pay and benefits.
With our expertise and technology, we ensure precision, reducing the likelihood of costly errors and employee grievances.
5. Saves Time
The payroll process consists of three stages: pre-payroll, payroll, and post-payroll tasks. Managing all three stages is time-consuming, as HR professionals spend about 11 hours each week on payroll administrative tasks.
Depending on your employees’ payroll cycles, you can expect to go through these stages weekly, biweekly, or monthly.
You also need to consider the time spent managing other tasks such as tax reporting and filing, retirement fund management, employee benefits, worker’s compensation issues, etc. Keeping payroll in-house requires much time and resources, often leading to productivity losses.
Another benefits of payroll outsourcing in Nigeria, is it prevents reduced productivity as your business saves valuable time that can be used for more strategic tasks.
6. Access to Expertise and Technology
The technological landscape is constantly changing, with numerous advancements in payroll processing. Outsourcing payroll allows you to leverage advanced payroll management tools and software, such as robotic process automation (RPA), that improve accuracy, efficiency, and security.
At Workforce Group, we offer cross-functional collaborations with various HR systems, allowing for seamless employee data integration and sharing.
7. Improved Data Security
According to the Association of Certified Fraud Examiners, payroll fraud happens in 27% of all organisations. Payroll data contains sensitive information, including employee personal details, salary information, and bank account numbers.
Ensuring the security of this data is crucial, and any breach can result in legal consequences, financial loss and reputational damage.
If you choose to run payroll in-house, you may spend a considerable amount of energy closely supervising every activity, checking the safety of your network, and safely backing up confidential data.
On the other hand, by outsourcing payroll to Workforce Group, you can trust that sensitive employee data is protected against internal fraud, cyber threats, and unauthorised access.
Our team of payroll management experts also follow strict data protection protocols and ensures compliance with Nigeria’s data protection regulations.
8. Better Scalability
As your organisation grows, so does your workforce. With an in-house team, managing payroll for a growing number of employees can be overwhelming.
Outsourcing payroll services offers scalability, allowing you to easily manage payroll for a few or a few hundred employees without worrying about expanding internal resources. Whether you’re expanding, downsizing, or dealing with
seasonal fluctuations, we quickly adjust to changes in your workforce, ensuring your business scale without additional payroll staff.
9.Boost Employee Satisfaction
Your employees expect to be paid accurately and on time. Payroll delays or calculation errors may portray you as unprofessional and hostile, leading to frustration and reduced morale. payroll outsourcing ensures employees receive their salaries and benefits on time, increasing job satisfaction and employee retention.
At Workforce Group, we offer services like electronic payslips and self-service portals, which allow employees to access their payroll information easily. This transparency and efficiency contribute to a positive employee experience.
10. Access to Comprehensive Reports
One of the benefits of Payroll outsourcing companies in Nigeria is that they offer detailed reports on payroll data, helping you make informed decisions.
These reports can include information on payroll expenses, tax deductions, employee benefits, and more. Access to comprehensive payroll reports allows you to analyse payroll trends, forecast future expenses, and improve decision-making.
For more on how data-driven payroll management can impact business growth, check out this article on how outsourcing HR functions can grow your business.
Things to Consider Before Outsourcing Payroll in Nigeria
To enjoy the benefits of payroll outsourcing, it is critical to research your potential service provider before engaging them. These four (4) tips will help you make the best decision:
1. Expertise
Find out how long the provider has been in the business and the number of clients they serve.
2. System
How do they store data? Has there been a system crash that has resulted in data loss?
3. Security
Your chosen provider must have an up-to-date data protection system. Ensure they have not encountered any security breaches or data leakages before.
4. Customer Support/Service
Imagine what it feels like to call in with a complaint and receive a negative surprise or no response. Find out how their customer support services work and how long it takes to rectify an error if it occurs.
Conclusion
Payroll management is critical to successful business operations. However, manually handling payroll can cause problems or consume limited resources. Outsourcing the payroll process to Workforce Group guarantees many advantages to your organisation.
At Workforce Group, we understand how a well-managed payroll impacts organisational success. We have supported over 250+ clients across several industries in achieving their desired business objectives by taking care of their less strategic tasks.
To outsource payroll or partner with us on your HR outsourcing needs, kindly schedule a consultation here or send an email to hello@workforcegroup.com.
