”Whether to keep payroll in-house or outsource it – in whole or in part – depends primarily on an employer’s size and expertise as well as cost and technology,”

Outsourcing works best for small and medium-sized businesses that are not large enough to run an HR department on their own. Larger companies tend to do better keeping HR in-house. Many of these companies have the means to not only run payroll, but to staff an entire department and provide computer programming and IT support to integrate that department within the rest of the company. Small businesses just don’t have the resources to do that, and by outsourcing their HR, they don’t have to.

Complexity also plays a key, says the SHRM, which is why larger companies like hospitals and universities keep HR in house. They have to ”track different shift differentials, overtime, pay cycles and other variations on a regular basis” that payroll vendors just can’t keep up with. It’s easier for these types of employers to hire an IT team to build the program and maintain it for them.