Need some inputs regarding how third-party payroll works. Ours is a construction company where in we have more than 400 staff on our payroll. Going forward with expansion we will need to add on our workforce and similarly statutory compliance and salary cost will add up. We are thinking of hiring some category of staff under third party payroll.
If anyone can brief about pros and cons of starting third party payroll system keeping in mind construction contractor company and industry, it would be of great help.
You have to appoint third party contractor and transfer your employees to their contract, contractor usually asking for 10% of service charges of total billing amount.
Note:
Contractor should have PF, ESIC and labour license etc.
When looking to hire employees on a contract basis (Third party payroll) through a consultancy, it is important to ensure that they have met all compliance requirements, including Form-XVI and Form-XVII. Consider negotiating an agreement based on a percentage of the employee’s actual pay, as mutually agreed upon.
For invoice payments, request all compliance returns, payment challans for the previous month, as well as GSTR and TDS payment challans if applicable. This will help ensure smooth and transparent transactions between both parties.
Hi,
Thank you for the inputs.
My query is “Is getting third party payroll consultant” a good move or what are the benefits or drawbacks of getting staff on third party payroll?
If you can through light on the pros and cons it will give me more clarity.
I think you are basically wanted to hear the pros and cons of staffing. Here are a few
Benefits
Using third-party staffing services allows businesses to quickly scale their workforce up or down based on demand without long-term commitments.
Offloading manpower responsibilities reduces the administrative burden on your HR team, allowing them to focus on strategic initiatives.
Third-party staffing providers often offer better benefits packages and resources due to their larger pool of employees, which can be attractive to your staff.
By outsourcing manpower, businesses can mitigate some legal risks associated with employment, as the third-party provider assumes certain liabilities.
Outsourcing tasks allows management to concentrate on core business activities, improving overall efficiency and productivity.
Drawbacks
Employees may feel less connected to the company if they are on a third-party vendorl, which can impact morale and loyalty.
Coordinating between your business and the third-party provider can lead to communication challenges, potentially causing delays or misunderstandings.
The quality of service provided by the third-party provider can vary, and poor service can lead to employee dissatisfaction.
Third-party providers may offer less flexibility in payroll and HR services, limiting the ability to customize processes to fit your specific needs.
Long-term contracts with third-party providers can be restrictive, making it difficult to switch providers or bring such resources back in-house if necessary.
Hi Bhumi,
The pros will be the workload may reduce to the company only if the 3rd party will cover all statutories. Even some catogory of employees should be under all statutories iirespective of wages.
If you start hiring from third party payroll then the candidates will know before joining and will not be any issue. But you have to make sure that the 3rd party cover under all statutory requirements as it will be Primary company’s responsibility to check whether they are paying all statutories on time.
If you are moving existing employees to 3rd party payroll, you may face some resignations as all employees may not accept the same.
This stage is where you want to concentrate on important work not on daily queries of employees. We at BIS is also work as Third Party contractor, working for Indiabulls and other Construction companies. If you want We can help you out in streamline your Labour’s payroll and statutory compliance related activities.
Yes, it’s an effective approach for certain positions within a project-based company. By aligning resource planning with project timelines, you can institute a hiring strategy involving a 3-month initial contract, which can then be extended either monthly or every 3 months based on the project’s duration and billing cycle. Additionally, the option to hire people with a one-month notice period provides a helpful measure in case an employee is underperforming or if a project is put on hold. Please reach out to 9014911466 if you need further information.
If you are thinking of shifting to third-party payroll for your construction company, you might want to consider using one of the reliable payroll outsourcing companies such as Easy Source to handle the process.
What you get when you outsource
By outsourcing payroll (salary computation + statutory compliance + tax & benefit remittances) to a specialist, you relieve your in-house team from heavy admin tasks and compliance burden.
Outsourcing tends to reduce errors in salary processing and statutory filings because these companies use experienced staff and automated tools.
You also benefit from lower overhead: no need for dedicated payroll staff, infrastructure or software — this is often more cost-effective than maintaining everything in-house.
If you choose a provider like Easy Source, you get access to a company with extensive experience in payroll outsourcing and manpower services — they already serve many clients and can scale as your workforce grows.
What to watch out for / possible drawbacks
When using a third-party, employees might feel less “connected” to your core company — which sometimes impacts morale or loyalty. This can especially matter in construction businesses where trust and long-term retention are useful.
Coordination between your company and the third-party provider needs clear communication (attendance, overtime, statutory compliance data etc.). If that’s not managed well, there could be delays or misunderstandings.
There’s a chance of resignations or dissatisfaction if existing employees are asked to shift under a third-party payroll contract — some may not accept it, especially if benefits or perceived job security change.
When outsourcing payroll makes sense (for you)
Since you run a construction company with over 400 staff and are expecting expansion, outsourcing payroll can be a smart move if:
You want to reduce the burden on your internal HR/finance team, so they can focus on core operations.
You expect frequent changes in workforce size (scaling up/down depending on projects).
You want to ensure compliance with statutory rules (PF, ESIC, taxes) without investing in internal payroll infrastructure.
You prefer to partner with a trusted payroll outsourcing company like Easy Source — which brings industry experience, compliance know-how and support.
What you get when you outsource
What to watch out for / possible drawbacks
When outsourcing payroll makes sense (for you)