How Much Does It Cost to Outsource Payroll in India?

Payroll outsourcing costs in India depend on your team size, service scope, and operational complexity. What you actually pay varies widely based on these factors.

Here's what most providers won't tell you upfront: the base fee is just the beginning. In this guide, we'll break down real costs, hidden charges, and what drives your final payroll outsourcing bill.

How much does it cost to outsource payroll in India in 2026?[toc=Payroll Outsourcing in India]

Payroll outsourcing costs in India depend on your company size, service scope, and the pricing model your provider uses.

Most payroll companies charge businesses using either a per-employee-per-month (PEPM) rate or a flat monthly fee.

Per Employee Per Month (PEPM) Pricing

This is how most payroll outsourcing companies structure their fees. You pay a fixed rate for each employee on your payroll schedule.

• Basic payroll processing (salary calculations, payslips): ₹150-₹400 PEPM
• Payroll + statutory compliance (PF, ESI, PT, TDS filings): ₹300-₹800 PEPM
• Managed payroll + HR support (full-service with benefits administration): ₹800-₹2,500+ PEPM

The PEPM model scales with your headcount. As you grow, many payroll providers offer volume discounts that help cut payroll costs per employee.

Flat Monthly Fee Pricing

Some payroll outsourcing providers charge a fixed monthly rate regardless of employee count. This works well for small teams or startups with predictable headcount.

• Small companies (5-20 employees): ₹16,000-₹50,000 per month
• Mid-sized teams (20-50 employees): ₹50,000-₹83,000 per month
• Enterprise (50+ employees): Custom pricing based on complexity

Pricing Models Comparison

The PEPM model is the most common because it's easy to budget for and scales naturally as you hire.

For a deeper comparison of different payroll service providers and their pricing models, check out our payroll services cost comparison guide.

To understand the complete payroll landscape in India, explore our comprehensive payroll in India guide.

What are the factors influencing payroll outsourcing costs in India?[toc=Factors Influencing Payroll Costs India]

Your final payroll outsourcing costs depend on more than just employee count. We've identified the key factors affecting the payroll outsourcing costs in India.

1. Company size matters: Larger teams get lower PEPM rates due to economies of scale. Small teams (under 20 employees) often pay higher per-employee fees or flat monthly rates.
2. Service scope changes the price: Basic payslips cost less than full statutory compliance. Add-ons like leave management, reimbursements, bonus processing, and custom reporting increase your payroll fee by ₹50-₹200 per employee.
3. Operational complexity adds costs: Multi-state payroll operations cost 15-30% more because labor laws vary by state. Complex salary structures with variable pay, commissions, or multiple payroll schedules also increase what payroll companies charge businesses.
4. Integration and setup fees apply upfront: Connecting your payroll software to existing HRIS or accounting systems costs extra. Most payroll outsourcing providers charge ₹5,000-₹50,000 for initial setup and onboarding.

Understanding what makes up your payroll components helps you better evaluate what providers are actually charging for.

But here's where most companies get surprised: the factors above are disclosed upfront. The real budget-breakers are the hidden costs that only show up after you sign the contract. If you're new to payroll, start with our guide on what is payroll and how it works.

What are the hidden and overlooked payroll costs?[toc=Hidden Costs]

This is where most "cheap payroll" quotes quietly break. We've seen companies sign at advertised rates only to pay significantly more within months.

• Setup and onboarding fees. Most payroll outsourcing providers charge upfront to configure employee data and statutory registrations. Some hide these in higher monthly fees instead.
• HRMS and system integrations. Connecting your payroll system to existing platforms costs extra. Custom reports often come with recurring charges.
• Statutory compliance add-ons. Some providers separate PF, ESI, and TDS filings from base processing. Compliance management charged separately jumps your costs significantly.
• Off-cycle payroll runs. Processing arrears, bonuses, or corrections outside regular schedules costs extra. These charges hit during months with variable pay.
• Employee support fees. Basic payroll services don't cover employee queries. Dedicated support for payslip or tax questions is often an add-on.
• Regulatory update charges. When labor laws change, some payroll providers charge for system updates and compliance adjustments.

The pattern we've seen: providers quote low base rates, then layer on charges for everything else. Your actual payroll outsourcing costs can easily run 40-60% higher than the initial quote.

Understanding India's payroll compliance requirements helps you identify which statutory costs should be included in base pricing versus charged separately.

For comprehensive guidance on managing payroll effectively, explore our payroll administration best practices guide.

Now that we've covered the hidden costs that inflate your payroll bill, let's look at how your location in India affects what you actually pay.

Do payroll costs vary by region in India?[toc=Costs by Region]

Location affects your payroll outsourcing costs less than you'd think, but multi-state operations definitely cost more.

Most payroll providers charge similar PEPM rates whether you're in Bangalore, Mumbai, or Delhi. The bigger cost driver is managing employees across multiple states with different labor laws.

Multi-state operations add complexity: Each state has different Professional Tax rates, Shops & Establishments Act requirements, and minimum wage rules. Processing payroll across Karnataka, Maharashtra, and Delhi costs 15-30% more than single-state payroll.

Tier-1 vs Tier-2 city differences are minor: Providers don't typically charge more for metro cities. However, businesses in metros often have more complex salary structures, which increases costs indirectly.

If you're hiring in specific cities, we've created detailed guides for payroll outsourcing in Bangalore, Delhi, Mumbai, Chennai, and Pune.

Regional pricing isn't the issue, compliance complexity across states is what drives your bill higher.

Need help calculating actual employee costs in India? Use our free tools:

• Salary Calculator to estimate CTC breakdown and take-home pay
• Employee Cost Calculator for complete hiring expense estimates
• Gratuity Calculator to plan for long-term employment costs

For step-by-step guidance on setting up payroll operations, read our guide on how to pay employees in India.

For a complete overview of payroll outsourcing providers in India, explore our top 10 payroll outsourcing companies guide and best outsourced payroll services comparison.

Get Started with Wisemonk EOR[toc=Wisemonk EOR]

Wisemonk simplifies payroll outsourcing in India with transparent pricing and zero hidden fees. We handle complete payroll processing, statutory compliance, and benefits administration at $99 per employee per month no setup charges, no FX markups, no surprises.

With our Employer of Record services, we manage everything from employment contracts to PF/ESI/TDS filings, so you get predictable monthly costs instead of layered invoices. We currently process $20M+ in monthly payroll for 300+ global companies hiring in India.

Ready to get transparent payroll pricing for your India team? Contact us today to get started.