Some benefits of payroll outsourcing for foreign startups or new companies – Indonesia is one of Southeast Asia’s top investment destinations for the digital economy. With a vast market (more than 200 million internet users), an abundance of trained talent, and rapidly developing IT infrastructures, the country provides a supportive ecosystem for tech businesses to flourish.
Let us notice data provided by Google, Temasek, and Bain Company in the latest report of e-Conomy SEA. Indonesia secured 34% of total private funding in Southeast Asia last year and gained 25% in the first half of 2022.
The report says Indonesia’s gross merchandise value (GMV) grows 22% year-on-year or hits $77 billion. E-commerce contributes the most, followed by travel, transportation & food, and online media.
The value is estimated to reach $130 billion by 2025. The report also expects Indonesia’s digital economy becomes the largest of the region in 2030 with $220-360 billion of GMV. In other words, Indonesia remains an attractive place for foreign startups to expand their business.
However, setting up a new office or subsidiary in Indonesia is like jumping down a rabbit hole. You will face a challenging and complicated business environment with local bureaucracy, regulations, and policies.
Also read: Choosing Cloud Payroll vs Payroll Outsourcing in Indonesia
To manage payroll, for example, you need to acquire deep knowledge of national laws in labor, wage, taxes, healthcare, and social security. Otherwise, you will get headaches dealing with your tasks, which can lead to miscalculations and non-compliance.
Understanding domestic regulations take time for a foreign company. While hiring a local administrator to cope with payroll tasks is not cost-efficient for a new small office.
The most efficient way is using a payroll outsourcing service provided by a third party. You can find a reliable payroll agency and let them handle your organization’s payroll process without worries.
The Benefits of Using Payroll Outsourcing Services
Here are some benefits of payroll outsourcing for foreign startups or new companies in Indonesia.
1. Compliance with the laws
All business practices in Indonesia must comply with local regulations, rules, and policies. Unfortunately, domestic laws ruling payroll are very complex and frequently revised by the government. These will make you confused and frustrated.
You can skip these by hiring a payroll outsourcing Indonesia agency. Your payroll agency employs professionals with deep knowledge of the legal aspects of a business. They will ensure that your company’s payroll process adheres to the applicable laws.
With legal compliance, you can avoid sanction imposition that will affect your business reputation in the future.
2. Reducing overhead costs
Managing in-house payroll can be time-consuming and expensive. It requires hiring and training staff, purchasing and maintaining payroll software, and dealing with any errors that may arise.
Employing staff to administer payroll does not guarantee effectiveness. The result may depend on your staff’s knowledge, experience, and skills in running the payroll process.
On the other hand, using a payroll outsourcing service is much more cost-effective. You will pay for the services provided by the agency only without additional costs. You do not need to pay regular staff salaries, software maintenance, and correction costs.
Also read: A Startup’s Guide to Payroll Outsourcing in Indonesia
3. Improving accuracy and efficiency
An outsourcing agency commonly employs payroll specialists with experience in Indonesia’s salary system. They are used to calculating overtime pay, religious holiday allowances (THR), health insurance (JKN) and social security (Jamsostek) premiums, and income tax (PPh 21/26).
The agency will handle all aspects of payroll, ensuring that every component of the payslip is calculated accurately and completed quickly. The service also includes administering the salary payment process to all employees.
The use of payroll outsourcing will not only minimize the risk of typical errors in salary calculations but also let you pay your employee’s salary on time.
4. More focus on key business activities
Spending hours on the payroll process may interrupt your main business activities. You can not focus on your strategy to nurture business growth when you waste your time managing administrative tasks.
Leaving the payroll tasks to an outsourcing agency allows you to focus on pursuing your organization’s goals. You will have more time to find a way to dominate market share and increase business revenue.
5. Well-managed payroll database
Another benefit of using payroll outsourcing is that you do not need to worry about managing the payroll database. The payroll service provider will create neat documentation and store your company payroll data securely.
Documented payroll helps you track and find records from month to month. Well-managed payroll data is also advantageous for accounting purposes, such as calculating salary expenses.
Despite the benefits of payroll outsourcing above, you should note that data protection is essential. That is why you better find a professional and trusted payroll service vendor providing a guarantee for data security.
Pegawe, a reputable payroll outsourcing in Jakarta, is the best choice. We are a trusted HR outsourcing, part of Fast 8 Group, a company specializing in developing HR & payroll software since 2008.
We develop Gadjian, cloud-based HRIS software, to help HR professionals manage payroll from the web. Gadjian is a software as a service (SaaS) designed for an automatic and efficient payroll.
Also read: Requirements for Foreign Workers in Indonesia
We help you cope with the following payroll tasks:
- Remuneration: We calculate salary, overtime pay, an annual religious holiday allowance (THR), and bonus, then prepare payslips for both permanent and temporary employees.
- Income tax: Let us manage your employee’s income tax, for both locals (PPh 21) and expatriates (PPh 26), by calculating, paying, and reporting monthly, according to tax law.
- Health and social insurance: We register your employee to Indonesia’s national healthcare program (BPJS Kesehatan) and social security program (BPJS Ketenagakerjaan) and also administer monthly premium calculations, payments, and reports.
- Attendance: Our service includes managing your employee attendance data.
- HR consulting: We assist you in dealing with the delicate process of employment contract termination, including the separation pay calculations based on labor law. Feel free to consult with us.
Whether you run a small office or manage a large enterprise in Indonesia, we would love to hear from you about what we can do for your business.
Visit our website at Pegawe. Call us or leave a message, and our friendly team will get back to you shortly.