Managed Payroll: The Emerging Trend in Streamlining HR Operations

Learn more about what Managed Payroll services are, why more companies are opting to use Managed Payroll to help run their HR department and how OutSail can help you find the right partner

Brett Ungashick
OutSail HRIS Advisor
January 25, 2024
User looking at help on a screen

In today's fast-paced business landscape, where remote work is becoming the norm, compliance issues are growing, and resource constraints are real, traditional HR management is facing its own set of challenges.

Managed Payroll, a revolutionary concept, is gaining prominence as a solution to streamline HR operations and drive efficiency. In this article, we'll dive deep into Managed Payroll, exploring its definition, advantages over traditional models, and the driving forces behind its rise.

Understanding Managed Payroll

Definition and Scope

Managed Payroll, in essence, is the outsourcing of payroll and related HR functions to specialized service providers. These providers, often HR Consulting Firms, HR Outsourcing Firms, or Managed Services companies, take over the intricate task of managing payroll, taxes, and compliance on behalf of organizations. The scope of Managed Payroll extends beyond mere paycheck processing; it involves strategic HR support, ensuring businesses stay compliant and efficient in their HR operations.

Benefits Of Traditional Models

The key advantage of Managed Payroll lies in its departure from traditional in-house or PEO (Professional Employer Organization) models. PEO models, while offering similar services, can be expensive and require companies to relinquish control over HR decisions. On the other hand, the in-house model demands having the right talent and retaining them, which can be challenging and costly. Managed Payroll strikes a balance, offering expert support while allowing companies to retain control over their HR strategies and decisions.

The Driving Forces Behind Managed Payroll

Shift in HR Landscape

The HR landscape is rapidly evolving, with remote work becoming the new normal. Companies now operate with geographically dispersed teams, making HR management more complex. Managed Payroll steps in as a solution, providing support across diverse locations and helping companies navigate the intricacies of HR administration, irrespective of physical boundaries.

Complexity in Compliance and Tax Management

With businesses expanding into new markets, ensuring compliance and managing taxes has become increasingly intricate. Different regions come with distinct tax laws and employment regulations. Managed Payroll experts are equipped to handle these complexities, reducing the risk of costly errors and penalties for non-compliance.

Resource Constraints in HR

Many HR departments face limitations in terms of tools, budgets, and resources. Managed Payroll services bridge this gap by providing access to a dedicated team of experts who can streamline HR operations without the need for significant internal investments.

The Retreat of Traditional HRIS/HCM Providers

Change in Focus

Traditional HRIS (Human Resource Information System) and HCM (Human Capital Management) providers are shifting their focus away from strategic advisory roles. They are increasingly concentrating on the development of HR technology solutions. While technology is essential, this shift leaves a void in strategic HR support that Managed Payroll services can effectively fill.

Impact on HR Support

This shift in focus has significant consequences for businesses in need of strategic HR support. Without the guidance of experienced HR professionals, companies may struggle to make informed HR decisions, especially in the face of complex compliance and workforce challenges.

Managed Services as the New Vanguard

Rise of HR Consulting and Fractional HR Firms

The rise of Managed Payroll has paved the way for HR Consulting and Fractional HR firms like OperationsInc and HCM Unlocked. These firms offer specialized expertise on demand, allowing organizations to access elite HR and payroll talent without the overhead costs of full-time hires.

Benefits of Elite HR and Payroll Talent on-Demand

One of the standout benefits of Managed Payroll services is the ability to tap into top-notch HR and payroll professionals nationwide. This eliminates the risk of making a bad hire and ensures that your HR operations are in the hands of experienced experts who understand the intricacies of compliance, tax management, and strategic HR support.

Future Outlook

Sustainable HR Models

The future of HR departments lies in sustainable models that can adapt to evolving challenges. Managed Payroll and similar services are well-positioned to address issues like burnout and the retirement of seasoned HR professionals. By offering specialized support and strategic guidance, these services can help businesses thrive in the ever-changing HR landscape.

Advisory Role of Managed Services

Looking ahead, Managed Payroll services are likely to play an even more prominent advisory role. They will not only manage payroll and compliance but also provide invaluable strategic insights to help businesses make informed decisions about their workforce. As companies continue to navigate remote work, compliance complexities, and global expansion, the expertise of Managed Payroll services will become increasingly vital.


In a world where HR operations are becoming more complex and challenging, Managed Payroll emerges as a beacon of hope. Its ability to provide expert support, streamline compliance, and offer strategic guidance sets it apart from traditional HR models.

As the HR landscape continues to evolve, businesses should consider Managed Payroll as a viable solution to modern HR challenges. By adapting to emerging trends and leveraging the expertise of Managed Payroll services, organizations can ensure long-term success in the ever-changing world of HR management. 

What is Managed Payroll?

Managed Payroll is the outsourcing of payroll and related HR functions to specialized service providers, such as HR Consulting Firms, HR Outsourcing Firms, or Managed Services companies.

What services are typically included in Managed Payroll?

Managed Payroll services extend beyond paycheck processing to encompass strategic HR support, compliance management, tax handling, and other HR functions crucial for organizational efficiency.

How does Managed Payroll differ from traditional HR models like in-house or PEO?

Unlike traditional models, Managed Payroll offers expert support while allowing companies to retain control over their HR strategies and decisions. It strikes a balance between cost-effectiveness and HR efficiency.

What are the driving forces behind the rise of Managed Payroll?

The rise of Managed Payroll is driven by factors such as the shift towards remote work, complexity in compliance and tax management, resource constraints in HR departments, and the changing focus of traditional HR technology providers.

How does Managed Payroll address complexity in compliance and tax management?

Managed Payroll experts are equipped to handle the intricacies of compliance and tax management across diverse regions, reducing the risk of errors and penalties for non-compliance.

2024 HRIS 
Landscape Report
Read OutSail's 2024 HRIS Report with write-ups on 30+ leading vendors
Thank you! You can download your report at this link
Oops! Something went wrong while submitting the form.
Unsure about your software needs?
Use our HRIS Requirements Builder to quickly identify your must-have & nice-to-haves
Brett Ungashick
OutSail HRIS Advisor
Accelerate your HRIS selection process with free support
Thank you! Our team will reach out to you shortly
Oops! Something went wrong while submitting the form.
The HR Tech Download
Stay on the industry's cutting edge with our popular newsletter
Thank you! You will receive the next HR Tech Download newsletter
Oops! Something went wrong while submitting the form.

Meet the Author

Brett Ungashick
OutSail HRIS Advisor
Brett Ungashick, the friendly face behind OutSail, started his career at LinkedIn, selling HR software. This experience sparked an idea, leading him to create OutSail in 2018. Based in Denver, OutSail simplifies the HR software selection process, and Brett's hands-on approach has already helped over 1,000 companies, including SalesLoft, Hudl and DoorDash. He's a go-to guy for all things HR Tech, supporting companies in every industry and across 20+ countries. When he's not demystifying HR tech, you'll find Brett enjoying a round of golf or skiing down Colorado's slopes, always happy to chat about work or play.

Subscribe to the HR Tech Download

Don't miss out on the latest HR Tech trends. Subscribe now to stay updated
By subscribing you agree to our Privacy Policy.
Thank you! You are now subscribed to the HR Tech Download!
Oops! Something went wrong while submitting the form.