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Discover the best HR and payroll software for your business. Explore top platforms and learn which system fits your size, needs, and growth goals with OutSail's comprehensive guide.
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The HR and Payroll software market is incredibly crowded. If you visit a review site, such as G2, you will see over 80 software vendors that provide payroll software.
See your HRIS matches: Find out which vendors best fit your business on OutSail’s HRIS Marketplace.
How is one supposed to make sense of all of those options and identify the best HR and Payroll software for their needs?
It's important to first understand that all payroll platforms are not made equally. Some are designed for very small teams. Some are light on technology, but heavy on service. Some are great for global payroll. And some are designed for the world's largest enterprises.
To make things simple, we will focus on four types of payroll solutions in this article
What is a PEO?
PEOs offer the most unique solution in the HR and Payroll industry. A PEO is mechanism by which smaller companies can outsource their payroll & HR functions, decrease their benefit costs and ensure compliance.
If you are the owner of a 10-person company, you'll spend a lot of your time ensuring employees are properly paid and hoping that you're staying compliant along the way. And if you want to offer benefits to your employees, you'll pay the highest rates on the market, because you have little leverage with the insurance carriers.
A PEO solves this problem by pooling hundreds of small employers onto one super-entity. By putting one thousand 10-person companies together, a PEO can get much better benefit rates for it's members. Additionally, since your employees are now technically employed by the PEO vendor, they will take responsibility for your compliance management, payroll processing and tax filing.
Examples of PEOs:
What are standalone payroll platforms?
A standalone payroll platform is just what it sounds like. It is a technology solution for processing payroll, but one that does not provide a high degree of HR-related functionality.
Traditionally, a standalone payroll platform will be used by companies that have another tool already in-use for their HR needs. Many standalone payroll tools will be lean and stripped down, compared to other categories in this report. Additionally, these types of solutions are often serviced by a payroll processing team, such as a CPA firm or HR consulting firm, who will provide a layer of compliance and tax support.
Examples of standalone payroll platforms:
What are HR-Centric Payroll Platforms (Mid-Market)?
HR-Centric Payroll Platforms can also be called Human Resources Information Systems (HRIS). While these solutions do offer payroll processing capabilities, it’s their broad HR functionality that distinguishes them from the previous group. In addition to a payroll module, these platforms include features like benefits administration, recruiting and onboarding tools, and performance management modules.
This segment of the market is designed for small to mid-sized businesses, roughly companies with 50–500 employees. These HR-centric platforms are typically effective until a business grows beyond the 500-employee mark, at which point it might need to upgrade to the next tier of systems (enterprise solutions).
Examples of HR-Centric Payroll Platforms (Mid-Market):
What are HR-Centric Payroll Platforms (Enterprise)?
Just like the previous group of vendors, these solutions are distinguished by the fact that they can do more than just process payroll. These solutions can provide functionality to support employees from the day they are hired to the day they retire.
These solutions are typically highly configurable, meaning businesses can create their own rules, automations and workflows to achieve greater efficiency. These types of solutions are designed for companies with 200 employees all the way up to the largest companies in the world. These types of solutions can be harder to implement and more costly, however.
Examples of HR-Centric Payroll Platforms (Enterprise):
A Professional Employer Organization (PEO) is a unique solution that allows smaller companies to outsource their payroll and HR functions, reduce benefit costs, and ensure compliance. Unlike standalone payroll platforms (which only handle payroll), PEOs bundle HR and payroll services together. A PEO effectively becomes the employer-of-record for your staff, pooling many small companies under its umbrella to get better benefits rates and taking on responsibilities like compliance management, payroll processing, and tax filing. This contrasts with other solutions where your company handles these tasks in-house or with software support.
Standalone payroll platforms focus solely on payroll processing and often assume you have other systems in place for HR tasks. They provide a streamlined way to run payroll but typically lack features like onboarding, performance management, or benefits administration. HR-centric payroll platforms, on the other hand, offer a broader suite of HR features in addition to payroll. For example, an HR-centric system will allow you to manage hiring, onboarding, benefits, and performance reviews in one platform, whereas a standalone payroll tool would require you to handle those HR functions separately or via additional software.
Examples of HR-centric payroll platforms suitable for small and mid-sized businesses include Gusto, Paychex, iSolved, Rippling, Paylocity, Paycom, and Paycor. These platforms are designed to meet the needs of growing companies by providing comprehensive HR and payroll capabilities in a single system. They are often user-friendly and scalable, helping businesses manage HR tasks up until they approach the upper end of the mid-market (around a few hundred employees).
HR-centric payroll platforms designed for enterprise-level companies offer highly configurable solutions to support employees throughout their entire employment lifecycle. Examples include ADP, Workday, Dayforce, and UKG (Ultimate Kronos Group). These platforms are suitable for companies with 200 employees and above, providing advanced features and scalability to meet the needs of large organizations.
When choosing between different types of HR and payroll systems, companies should consider factors such as their size, specific HR needs, budget, scalability, level of customization required, and the complexity of their payroll and compliance requirements. Assessing these factors can help companies determine which type of system best suits their needs and supports their growth objectives.
