How Much Does Payroll Outsourcing Cost in India?
Payroll outsourcing costs in India typically range from ₹30 to ₹150 per employee per month, depending on the scope of services, company size, and compliance requirements. This guide breaks down all the factors that affect payroll outsourcing pricing so you can make an informed decision.
Payroll Outsourcing Cost Comparison (2026)
| Service Component | In-House Cost | Outsourced Cost | Annual Savings |
|---|---|---|---|
| Payroll Executive Salary | ₹3-5 LPA | Included | ₹3-5 LPA |
| Payroll Software License | ₹50K-2L/year | Included | ₹50K-2L |
| PF/ESI/PT Filing | ₹30K-60K/year | Included | ₹30-60K |
| Form 16 & TDS | ₹20K-50K/year | Included | ₹20-50K |
| Total Annual Cost | ₹4-8 LPA | ₹36K-1.8L/year | 60-80% savings |
What Is Included in Payroll Outsourcing?
- Monthly Salary Processing: CTC computation, deductions, net pay calculation
- PF & ESI Compliance: Monthly challan generation, ECR filing, return submissions
- Professional Tax: State-wise PT calculation and quarterly/monthly filing
- TDS on Salary: Monthly TDS computation, quarterly returns (24Q)
- Form 16 Generation: Annual Form 16 and Form 12BA for all employees
- Payslip Distribution: Digital payslips via HRMS or email
- Full & Final Settlement: Exit calculations including leave encashment, gratuity
- Statutory Bonus: Annual bonus calculation under the Payment of Bonus Act
Factors That Affect Payroll Outsourcing Cost
1. Number of Employees
Per-employee pricing decreases as headcount increases. A company with 10 employees may pay ₹100-150/employee/month, while a 200+ employee company might pay ₹30-50/employee/month.
2. Compliance Complexity
Multi-state operations with different PT slabs, factory registrations, and industry-specific compliances increase costs. Companies operating in only one state with standard compliance requirements get lower pricing.
3. Frequency of Changes
High employee turnover, frequent salary revisions, and mid-month joinings/exits increase processing complexity and may affect pricing.
4. Additional Services
Basic payroll processing costs less than comprehensive packages that include HRMS, leave management, expense reimbursements, and HR advisory services.
Payroll outsourcing cost calculator
Drag the slider to your team size to see HRTailor's actual monthly price and cost per employee.
Base fee covers 15 employees; each additional employee adds ₹400 (Without Compliance) or ₹500 (With Compliance). Teams above 100: custom quote. Full plan details on the pricing page.
Payroll outsourcing cost per employee: quick math
The fastest way to sanity-check a payroll outsourcing quote is to work out your actual cost per employee, not just the headline monthly fee. Most providers, including HRTailor, price on a base fee that covers a set number of employees, plus a per-head charge once you cross that threshold. On HRTailor's public pricing, the base plan runs Rs 10,000/month covering up to 15 employees, then adds Rs 400/employee/month beyond that. The "With Compliance" plan, which bundles statutory filings and compliance management on top of payroll, runs Rs 12,500/month for the same base, plus Rs 500/employee/month after.
Here's how that plays out at different team sizes:
| Team size | Base plan cost | Base plan per employee | With Compliance cost | With Compliance per employee |
|---|---|---|---|---|
| 10 employees | Rs 10,000/month | Rs 1,000/employee | Rs 12,500/month | Rs 1,250/employee |
| 15 employees | Rs 10,000/month | Rs 667/employee | Rs 12,500/month | Rs 833/employee |
| 25 employees | Rs 14,000/month | Rs 560/employee | Rs 17,500/month | Rs 700/employee |
| 50 employees | Rs 24,000/month | Rs 480/employee | Rs 30,000/month | Rs 600/employee |
The pattern holds across most providers: cost per employee drops as headcount rises, because the fixed base fee gets spread across more people while the marginal per-head charge stays flat. This is the number to compare across vendor quotes, not the sticker price - a provider quoting a lower base fee can still work out more expensive per employee if their per-head rate is high, or if they charge extra for filings and settlements that another provider bundles in.
Frequently Asked Questions
Is payroll outsourcing safe and confidential?
Yes. Reputable payroll outsourcing providers like HRTailor use encrypted systems, role-based access controls, and strict NDAs to protect employee salary data. All data is stored on secure cloud servers with regular backups.
Can I switch from in-house to outsourced payroll mid-year?
Absolutely. HRTailor handles mid-year transitions seamlessly, including carrying forward YTD salary data, leave balances, and tax computations. The transition typically takes 5-7 working days.
What is the minimum number of employees for payroll outsourcing?
HRTailor accepts payroll outsourcing for companies with as few as 1 employee. Our startup-friendly pricing makes outsourcing viable even for very small teams.