Compare in-house payroll with an actual Korean payroll outsourcing quote over the same horizon. The dedicated calculator values allocated payroll FTE, salary and company-specific employer burden, setup, system base and per-employee cost, training and compliance, retained oversight, vendor implementation, monthly base and per-employee fees, annual add-ons, and retained coordination in KRW. It solves total and per-employee monthly cost, headcount break-even, outsourced per-employee fee break-even, headcount sensitivity, and any cumulative economic-cost crossover. The page explains Labor Standards Act Article 48, Employee Retirement Benefit Security Act Article 8, National Pension Act Article 88, National Health Insurance Act Article 76, Employment and Industrial Accident Insurance Premium Collection Act Articles 13 and 14, and Personal Information Protection Act Article 26 as checked on July 31, 2026, without inventing a universal statutory burden or market-average vendor fee.
The starting values are an illustrative formula check, not an official average fee or recommended burden rate. Use recent payroll calendars, allocated FTE records, fully loaded labor cost, system invoices, and an actual outsourcing quote and SLA on the same VAT basis.
Normalize both options to one horizon, average payroll headcount, and internal time value.
Whole months from 1 to 120
Average active payroll population
Use fully loaded cost for approval, review, and coordination
Enter allocated FTE, fully loaded labor, systems, training and review, and oversight outside the payroll team.
Use decimals such as 0.5 for shared roles
Use the company-specific rate for insurance, retirement, benefits, and related cost
Include implementation, monthly base and per-employee fees, annual add-ons, and the internal coordination that remains.
Include minimum, entity, and location base charges
Use the rate for the quoted headcount tier
Year-end settlement, termination, retro pay, extra entities, and similar work
Internal time that remains after outsourcing
12-month total economic cost comparison
Outsourcing KRW 36,000,000 saved
In-house total
KRW 72,400,000
Outsourcing total
KRW 36,400,000
Monthly saving
KRW 3,000,000
Annualized saving
KRW 36,000,000
KRW 72,400,000
KRW 36,400,000
Hold every other input constant and change only headcount or the outsourced per-employee fee until total costs match.
330.77 employees
Outsourcing is cheaper below this headcount; in-house is cheaper above it.
KRW 48,000
At the current headcount, outsourcing is cheaper when the actual fee is below this threshold.
See how the lower-cost option changes at 50%, 100%, 150%, and 200% of the current headcount.
| Headcount | In-house | Outsourcing | Lower-cost option | Difference |
|---|---|---|---|---|
| 50 | KRW 69,400,000 | KRW 25,600,000 | Outsourcing | KRW 43,800,000 |
| 100 | KRW 72,400,000 | KRW 36,400,000 | Outsourcing | KRW 36,000,000 |
| 150 | KRW 75,400,000 | KRW 47,200,000 | Outsourcing | KRW 28,200,000 |
| 200 | KRW 78,400,000 | KRW 58,000,000 | Outsourcing | KRW 20,400,000 |
The cheaper option does not reverse within the current 12-month horizon.
This is an economic crossover with annual costs spread over 12 months, not an invoice or cash-flow date.
Korean rules current in 2026 · primary sources verified 2026-07-31
Comparing only a vendor’s per-employee fee with one payroll administrator’s salary leaves out major costs on both sides. In-house payroll includes allocated FTE, employer-paid labor burden, payroll systems, training and review, and approval time outside the payroll team. Outsourcing includes implementation, a monthly base charge, per-employee processing, annual add-ons, and the internal coordination and review that remain with the company. This calculator converts both models into economic cost over one horizon, then shows the current saving, the headcount break-even, and the outsourced per-employee fee break-even.
Important: The opening 20% employer burden and every starting amount are fictional inputs used to demonstrate the formula. They are not a Korean statutory combined rate, market-average payroll outsourcing price, or recommended budget. Replace them with company records and written quotes.
A useful break-even model starts with records rather than memory. Recent payroll calendars and time logs separate ordinary monthly work from hiring, termination, leave, incentives, corrections, and retroactive changes. If year-end settlement or seasonal hiring is material, use a full year of records or include the peak workload in annual add-ons.
Allocated FTE is multiplied by annual salary, the employer burden multiplier, and the fraction of a year in the comparison period. Add setup and recruiting, the system base fee, employee-linked system cost, annual training and compliance, and oversight time outside the payroll team.
In-house total = setup + loaded labor + system base + employee variable cost + annual cost + oversight time
Add implementation and migration, the monthly base fee, headcount multiplied by the monthly employee rate, and annual contract add-ons. Internal coordination is valued with the same hourly assumption, so outsourcing never assumes that the company’s payroll workload automatically falls to zero.
Outsourcing total = implementation + base fees + employee fees + annual add-ons + coordination time
| Cost layer | In-house | Outsourcing | Evidence |
|---|---|---|---|
| One-time | Recruiting, setup, initial training | Migration and parallel operation | Project quote and staffing plan |
| Recurring fixed | Loaded FTE and system base | Monthly minimum and base fee | Payroll ledger, invoices, quote |
| Headcount-linked | Employee licenses and processing | Per-employee tier rate | Average payroll population and rate card |
| Internal time | Manager approval and review | Data delivery, approvals, review | Time logs, RACI, and SLA |
Each total is divided into cost that does not change with employee count and cost per employee over the comparison period. The threshold is where those two cost lines meet. In a common structure, in-house payroll has higher fixed labor cost but lower employee-linked system cost, while outsourcing starts with lower fixed cost and a higher per-employee rate. Outsourcing is then cheaper below the threshold and in-house is cheaper above it. The calculator also handles the reverse structure and reports the correct direction.
At the current headcount, the calculator removes the vendor’s employee-linked processing fee and solves the maximum monthly rate that would make the two totals equal. A quoted rate below the threshold makes outsourcing cheaper, provided the monthly base charge, annual add-ons, implementation, and internal time have already been captured accurately.
If both employee-linked rates are equal, headcount cannot change the cost gap and the lower fixed-cost model stays cheaper. A negative mathematical crossing also means the cost lines do not cross in the non-negative headcount range. The calculator reports that state instead of converting an impossible result into a plausible positive employee count.
This is a formula-check example, not a market quote. In-house payroll uses 1 FTE, KRW 45,000,000 annual salary, a 20% employer burden, KRW 300,000 monthly system base cost, and KRW 5,000 per employee per month. Outsourcing uses a KRW 500,000 monthly base fee, KRW 18,000 per employee per month, KRW 2,000,000 implementation, and KRW 2,000,000 annual add-ons. Both models retain eight hours per month outside the payroll team, valued at KRW 50,000 per hour.
| Item | In-house | Outsourcing |
|---|---|---|
| One-time cost | KRW 3,000,000 | KRW 2,000,000 |
| Loaded labor or vendor base fees | KRW 54,000,000 | KRW 6,000,000 |
| Employee-linked cost | KRW 6,000,000 | KRW 21,600,000 |
| Other fixed, annual, and internal-time cost | KRW 9,400,000 | KRW 6,800,000 |
| Total economic cost | KRW 72,400,000 | KRW 36,400,000 |
Outsourcing is KRW 36,000,000 cheaper in this example. Monthly cost per employee is about KRW 60,333 in-house and KRW 30,333 outsourced. Headcount break-even is approximately 330.77 employees, with outsourcing cheaper below that point and in-house cheaper above it while every other assumption stays fixed. At 100 employees, the outsourced per-employee fee break-even is KRW 48,000 per month. Changing only headcount to 500 produces KRW 96,400,000 in-house and KRW 122,800,000 outsourced, so the lower-cost option changes and in-house saves KRW 26,400,000.
This is a Korea-specific planning calculator using KRW and Korean rules reviewed on July 31, 2026. It does not calculate employee-specific statutory contributions, severance, tax, penalties, or legal liability. Cost advantage does not transfer the employer’s payroll governance responsibilities or replace contract, labor, tax, social-insurance, privacy, or accounting review.
Article 48 of the Korean Labor Standards Act requires the employer to prepare a wage ledger for each workplace and record wage-calculation bases and wage amounts when wages are paid. It also requires a written or electronic wage statement showing wage components, calculation methods, and relevant deduction details. An outsourcing scope should therefore name the owners and deadlines for source data, calculation review, statement delivery, correction, and employee communication.
Article 8 of the Employee Retirement Benefit Security Act addresses a retirement allowance system capable of paying at least 30 days of average wages for each year of continuous service. National Pension Act Article 88, National Health Insurance Act Article 76, and Articles 13 and 14 of the Employment and Industrial Accident Insurance Premium Collection Act establish employer contribution structures, but individual bases, ceilings, business size, and industry can change the actual cost. The calculator therefore asks for a company-specific total burden instead of asserting one universal statutory rate.
Article 26 of Korea’s Personal Information Protection Act requires a written arrangement for entrusted processing, including limits on use outside the entrusted purpose and technical and managerial safeguards. It also addresses disclosure of the entrusted work and processor, processor education and supervision, and consent before sub-processing. Payroll data can include resident registration numbers, bank details, family and deduction records, pay, and other sensitive employment information, so access, encryption, retention, deletion, incident notification, overseas handling, sub-processors, and exit data return deserve contract review.
If headcount is 80 today but may reach 250 within 18 months, run separate 80-, 150-, and 250-employee scenarios. Add vendor volume tiers, new entities, cross-border payroll, and the point at which in-house payroll needs another FTE.
Do not assign an employee’s full salary when only part of the role supports payroll. Allocate actual FTE, then value saved time conservatively if outsourcing would not redirect that capacity to productive work.
Shift work, incentives, equity compensation, expatriates, multiple entities, and several payroll cycles can matter more than headcount alone. Capture complexity through the actual base fee, per-employee tier, and annual or event-driven add-ons.
A company may keep payroll in-house despite slightly higher cost to preserve rapid policy changes, data control, employee experience, and organizational knowledge. Outsourcing may instead improve backup capacity and continuity when the current process depends on one key employee. Keep these non-price factors in a separate decision scorecard.
Caution: Do not invent a monetary benefit for productivity, error reduction, privacy incidents, or employee satisfaction. Use evidence-based conservative, base, and growth scenarios for measurable inputs. Evaluate control, security, knowledge retention, and service quality separately when a defensible monetary estimate is unavailable.
No. It is an illustrative input. Actual employer cost depends on contribution bases and limits, industrial-accident classification, retirement arrangements, benefits, recruiting, and training. Replace it with the company’s fully loaded payroll-cost rate.
Usually not. Employee-change approvals, source-data review, output approval, payment control, and employee escalation can remain internal. Use the future RACI and parallel-run records to estimate retained time without double-counting vendor work.
Only while every other assumption stays fixed and the result direction says in-house is cheaper above the threshold. Another internal FTE or a vendor volume discount changes fixed and variable cost, so rerun the model for each pricing and staffing tier.
The calculator does not determine input VAT recovery, tax deductibility, capitalization, or expense timing. Keep both models either VAT-inclusive or VAT-exclusive for comparison and confirm Korean tax and accounting treatment separately.
No. It spreads annual items evenly across 12 months to show an economic crossing. Salary timing, annual licenses, staged implementation, renewals, and termination charges belong in a separate monthly cash-flow schedule.
The current-law status and article effective dates were checked through Korea’s National Law Information Center OPEN API on July 31, 2026. These sources define operational boundaries and contract checks. The calculator does not use them to invent a universal employer burden, vendor fee, penalty, or legal conclusion.
Collect allocated FTE, fully loaded labor, system invoices, and retained internal time, then map the vendor’s base fee, employee rate, add-ons, and SLA to the same scope. Run conservative, base, and growth cases over one to three years rather than relying on today’s headcount alone.