Most businesses start HR on a register and payroll on a spreadsheet. That works while the team is small. As it grows, attendance disputes, late salary runs and compliance deadlines start taking whole days, and someone suggests buying HR software.
Choosing one is harder than it looks. There are many products, most demos look polished, and the problems only show up in the first real payroll run. This guide walks through what to check, in the order that matters.
Decide what problem you are solving
If your current system works and your team is happy with it, you may not need to replace it. Switching has a cost: data migration, training and a period of running old and new processes side by side.
If it does not work, write down exactly where it fails. The list often looks something like this:
- Attendance comes from several sources and has to be reconciled by hand
- Salary calculations live in a spreadsheet only one person understands
- PF, ESI and TDS filings are prepared at the last minute
- Employees call HR to ask about leave balances and payslips
- Owners cannot see headcount, absence or overtime without asking
This list becomes your requirement document and the yardstick for every demo.
Write your requirements before you shop
Before you speak to a vendor, answer these questions for your own business:
- Does it need to run in a browser, on Windows, or on phones as well?
- How will employees mark attendance: at a biometric device, from their phone, or both?
- Do you need to track field staff by location?
- Do you need a complete payroll module, or only attendance and leave?
- Which statutory items apply to you: PF, ESI, Professional Tax, TDS?
- Do you need training, recruitment, onboarding or performance modules now, or later?
- How many employees do you expect to have in two or three years?
Attendance is the foundation
Payroll is only as accurate as the attendance behind it. An attendance system records when each employee starts and stops work, and it should also capture breaks, leave and overtime. Get this wrong and every salary slip carries the error.
Businesses use different methods depending on how they work:
- Manual registers and time cards, which are cheap but slow to total and easy to dispute
- Spreadsheet timesheets, which are faster but depend on someone entering data correctly
- Biometric devices, which suit a single site where everyone comes in through the same door
- Mobile attendance with geo-fencing or face recognition, which suits field teams and multiple sites
- IP-based attendance, which limits check-ins to the office network
A good HR system accepts more than one method, applies your shift rosters and overtime rules automatically, and shows the manager exceptions rather than raw punches.
Payroll and Indian statutory compliance
This is where software built for India earns its place. Ask the vendor to show how each of these is calculated and which files the system produces.
- PF (Employees’ Provident Fund): employer and employee contributions each month, and the ECR file you upload to the EPFO portal
- ESI (Employees’ State Insurance): contributions for employees whose wages fall within the ESI limit, and the monthly challan
- PT (Professional Tax): levied by state governments, with slabs that differ from state to state, so the system must know where each employee works
- TDS on salary: tax deducted each month, quarterly returns on Form 24Q, and a Form 16 for each employee after the year ends
Rates and limits change from time to time. Ask how the vendor keeps them up to date, and whether you are told when a change affects your payroll.
Leave and employee self-service
Much of HR’s day goes on answering the same questions. How much leave do I have? Where is my payslip? Has my reimbursement been approved? Self-service moves those answers to the employee’s phone.
- Leave policies, balances and approvals, with a leave calendar for managers
- Payslips delivered to the employee, not printed and handed out
- Reimbursement and document requests from the app
- Company announcements in one place
Match the modules to your list
Most vendors offer the core tools: payroll, leave and attendance. Beyond that, products differ a lot. Once you know what you need, ask each vendor for their module list and mark it against your requirements. If something is missing, ask whether it is planned, available at extra cost, or not possible.
Don’t choose on price alone. Free and very cheap HR software exists, and it may be fine for a very small team, but check what it leaves out. A missing statutory report, or an attendance method that doesn’t suit your site, will cost more in staff time than the licence saves.
Check that it can grow with you
Your business will not look the same in three years. Before you sign, check:
- Whether the pricing and limits still work at two or three times your current headcount
- Whether the product is actively updated, including for changes in tax and labour rules
- Whether leave rules, shifts and salary structures can be configured without a developer
- Whether you can export all your data if you ever leave
If your policies are unusual and no product fits them, a customised system is possible, but it costs more than a standard product and takes longer to deliver. For most businesses, a configurable product is the better starting point.
A short checklist for the demo
- Run a sample payroll for three employees with different attendance, leave and overtime
- Show the PF, ESI, PT and TDS figures for each of them, and the files generated
- Mark attendance using the method your staff will actually use
- Apply for leave from the employee app and approve it as a manager
- Show a payslip as the employee sees it
- Export the month’s data to Excel
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