Last Updated on September 5, 2026 by Shankar Jadhav
Payroll outsourcing in India typically costs ₹50–₹150 per employee per month on a per-head model, or a fixed monthly fee from around ₹5,000–₹15,000 for small businesses. Price depends on headcount, pay-cycle complexity, statutory filings (PF/ESIC/PT/TDS), and whether compliance and payslips are included. For most SMEs, a bundled monthly plan is cheaper than an in-house payroll executive.
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The two pricing models
- Per-employee, per-month (PEPM): ₹50–₹150/employee. Scales with headcount; best above ~25 staff.
- Fixed monthly retainer: a flat fee (from ~₹10,000/mo at HRTailor) covering a defined scope. Predictable; best for 5–50 staff.
What drives the cost
| Factor | Lower cost | Higher cost |
|---|---|---|
| Headcount | Fewer employees | Larger workforce |
| Pay cycles | Single monthly run | Multiple / off-cycle |
| Statutory scope | Payroll only | + PF/ESIC/PT/TDS filings |
| Extras | None | Payslip portal, FnF, reimbursements |
| Locations | Single state | Multi-state PT/LWF |
In-house payroll vs outsourcing
An in-house payroll executive costs ₹25k–₹45k/month in salary alone - before software, training, and the penalty risk of a missed PF/ESIC filing. Outsourcing converts that into a smaller, predictable fee with compliance built in.
What should be included
- Monthly processing + payslips
- PF, ESIC, PT & TDS computation and filing
- Statutory registers
- Full & final settlement
- Attendance & leave integration
- A dedicated contact
Frequently asked questions
What is the average payroll outsourcing cost in India?
₹50–₹150 per employee/month, or a fixed fee from ~₹10,000/mo for SMEs.
Is payroll outsourcing cheaper than hiring in-house?
For most SMEs under ~100 staff, yes - no salary, software, or compliance-penalty overhead.
Does the price include PF and ESIC filing?
It should - always confirm statutory filings are in scope (HRTailor includes them).
Are there setup or hidden fees?
Ask for all-inclusive pricing; HRTailor quotes a flat monthly fee.
How fast can payroll be set up?
Typically within days once employee and salary data is shared.
See HRTailor's payroll plans →
Related: HR outsourcing · statutory compliance.
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How payroll cost varies across Indian states
Beyond central EPF and ESIC, each state adds its own Professional Tax slab and Labour Welfare Fund contribution. Maharashtra caps PT at Rs 2,500 per year; Karnataka charges Rs 200 per month above Rs 15,000 salary; Gujarat runs Rs 80 to Rs 200 by slab; Tamil Nadu uses half-yearly slabs. LWF ranges from Rs 6 to Rs 60 per employee per year by state. Multi-state employers need per-state payroll rules to avoid mixed-up filings.
Volume discounts and long-term contracts
Most Indian payroll outsourcing providers offer 10 to 25 percent volume discounts above 50 employees, and additional discounts on annual prepayment. Fixed-fee retainers become attractive above 200 employees where per-employee pricing plateaus. Ask for a written price schedule before signing to avoid renewal-time surprises.