Payroll Outsourcing: How Much Can Your Company Save?
1. Payroll Processing as a Strategic Cost
Payroll processing is one of the most critical and, paradoxically, most underestimated functions in managing a Portuguese company. Every month, without exception, the company must process salaries, calculate IRS withholdings, determine Social Security contributions, manage allowances, sick leave, absences and overtime - and submit mandatory declarations within legal deadlines.
For many companies, especially SMEs, this function is handled by one or two internal technicians with specialised software. It seems like a simple, controlled solution. But when you do a rigorous assessment of all associated costs - salaries, social charges, software, training, error risk and team turnover - the real cost is often much higher than management perceives.
This is precisely why we developed the Payroll Outsourcing Simulator - an interactive tool that allows any manager to calculate, in real time, the cost difference between maintaining an internal team and outsourcing.
Market studies indicate that Portuguese SMEs underestimate the real cost of internal payroll processing by an average of 35% to 50%.
2. The Hidden Costs of Internal Payroll Processing
2.1 Salaries and Social Charges
The employer pays 23.75% Social Security on all remuneration, including the mandatory 14 monthly payments.
Example: An HR technician with an annual gross salary of €18,000 costs the company €18,000 + €4,275 SS = €22,275 in remuneration alone.
Use our Business Cost Simulator or read The Real Cost of an Employee.
2.2 to 2.6 - Additional Costs
3. How the Simulator Works
The Payroll Outsourcing Simulator was built with three principles: simplicity, accuracy and transparency.
Configure your company data, toggle cost components on/off, and get instant comparison results.
4. Simulation Example - Company with 30 Employees
Internal Cost Breakdown
| Cost Component | Annual Value |
|---|---|
| HR technician gross salary (14 months) | €20,000 |
| Employer Social Security (23.75%) | €4,750 |
| Payroll software | €540 |
| Training & certifications | €800 |
| Estimated error costs | €900 |
| HR turnover (amortised over 3 years) | ~€5,300 |
| Management & supervision time | €1,800 |
| TOTAL INTERNAL COST | ~€34,090 |
Outsourcing Cost
| Service | Value |
|---|---|
| Monthly base (30 employees) | €250/month |
| Per employee (30 × €10/month) | €300/month |
| ANNUAL OUTSOURCING COST | €6,600 |
Estimated annual savings: €27,490 (~81% reduction)
🔗 Run your own simulation →
5. Pricing Structure
| Size | Employees | Base/month | Per employee | Annual |
|---|---|---|---|---|
| Micro | Up to 10 | €150 | €12 | ~€2,640 |
| Small | 11-30 | €250 | €10 | ~€6,600 |
| Medium | 31-60 | €400 | €8 | ~€14,400 |
| Large | 61+ | €600 | €6 | On proposal |
7. Conclusion
Investing in efficiency is not a cost. It is the most profitable decision you can make this year.
References: Portuguese Labour Code · Social Security Contributory Code · State Budget 2025
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