How Do I Start Outsourcing Employees to a Third-Party Payroll Company? Need Guidance!

I am currently handling the HR and Payroll of my company, which is in the retail sector. All these years, we were employing the employees on our company's payroll itself. We have employees working in different cities across the country.

Outsourcing Employees to a Third-Party Payroll Company

Now, the management has decided to outsource the employees (other than Head Office employees) to a third-party payroll company. This company will be responsible for recruiting and retaining the employees, taking care of all statutory areas like PF, ESI, etc. However, the selection of the candidates will remain with our company, once the third-party company screens and sends the candidates.

My question is, what is the procedure to get started with this, as I am very new to this? Kindly help me out.

Dear Sushil,

Many companies provide these services, e.g., Team Lease, etc. Factors to be considered while shortlisting the Outsourcing Partner include:

- Whether they are providing the same services as your industry (Retail Sector)
- Check their online website to authenticate the information
- Request a quote on the commercial aspect
- Ask for references
- Identify competitive advantage factors from the pool of applicants (e.g., online salary slips for employees, online database, etc.)

The process requires thorough thought on aligning vendors to your expected services.

Regards,
Sunil

Thank you for your valuable feedback. Now, I have one more question: if an employee is hired on a contract basis, are they entitled to statutory benefits such as ESI, PF, etc.? Additionally, what is the maximum duration for a contract, and how many times can the contract be renewed? Kindly assist me with these queries. Thank you!

As you are outsourcing your manpower for the first time, check for charges comparison with different manpower agencies and pick the best out of it. (You can find these agencies online). Since you are new to outsourcing HR, opt for a 1-year contract. It will provide you with insights into the positives and negatives of HR outsourcing, enabling you to make informed decisions.

Regards,
Ram Chauhan
HR Manager