The payroll software dilemma facing accountancy practices

Ian Davidson · Consultant @ Quarry Payroll Consulting · Published February 5, 2026

As legacy payroll platforms reach end‑of‑life, firms must choose between migration and outsourcing – but the wrong decision could fundamentally reshape your practice

The notifications are landing in inboxes across the profession. Your payroll software provider is discontinuing support, updates are becoming increasingly sporadic, or compatibility issues are mounting. If you’re running payroll services for clients – whether as a core offering or an ancillary service – you’re likely facing a decision that carries far greater implications than simply choosing new software.

This isn’t just a technology refresh. It’s a strategic crossroads that will define how your practice operates for the next decade.

The migration path – transformation or disruption?

The instinctive response for many practices is to find a replacement platform and migrate. It’s the path of continuity – you maintain control, keep revenue in‑house, and potentially access transformative technology. Modern cloud‑based platforms promise automation, better reporting, improved client portals, and integration with your practice management systems.

But the reality of migration is rarely as straightforward as the sales presentations suggest.

Consider the scale of the undertaking. If you’re processing payrolls for even 50 clients, you’re looking at 50 individual migrations. Each requires data validation, testing, reconciliation, and verification. Staff need comprehensive training. Clients need to be managed through the transition. The inevitable teething problems need resolving whilst maintaining service continuity during your busiest periods.

For many practices, this represents months of focused effort. Senior people get pulled away from revenue‑generating advisory work and business development. The opportunity cost is substantial, and the risk is real. Migration errors can trigger compliance issues, damage client relationships, and in worst cases, result in client losses precisely when you’ve invested heavily in the transition.

Yet dismissing migration purely on complexity grounds would be equally short‑sighted. I’ve witnessed practices emerge from well‑executed migrations with genuinely transformed operations. Productivity gains of 30 % or more aren’t uncommon when moving from legacy systems to properly implemented modern platforms. Processing times were dramatically reduced, error rates fell, and reporting capabilities that previously required manual compilation became automated. The net result was improved margins whilst service quality increased.

The critical questions aren’t whether migration is difficult – it is – but whether your practice has the resources, project‑management capability, and risk tolerance to execute it successfully.

The outsourcing alternative – strategic focus or revenue loss?

Sub‑contracting payroll processing to a specialist provider represents a fundamentally different approach, and one that many accountants initially resist. There’s an understandable reluctance to hand processing to third parties when you’ve built client relationships around providing comprehensive services.

But this perspective misses a crucial strategic point: payroll processing may not be the best use of your practice’s capabilities or your team’s time.

Consider what happens in many accountancy practices. Partners and senior managers spend valuable hours each month processing payrolls, chasing data, managing compliance updates, and troubleshooting pension upload issues. These are hours that could be deployed on tax planning, business advisory services, or practice development – activities that typically generate significantly higher margins and strengthen client relationships more effectively than payroll processing.

The economics warrant careful examination. Yes, you’re passing processing fees to a third party. But you’re also eliminating software costs, reducing compliance risk, and freeing up internal capacity. The margin you retain through appropriate markup on outsourced services, combined with the value of reallocated internal resources, can produce a stronger financial outcome than continuing to process in‑house.

Critically, outsourcing doesn’t mean abandoning the client relationship. With properly structured arrangements, you remain the primary contact. The client continues to see you as their trusted advisor. The outsourcing provider operates behind the scenes, either invisible to your clients or up‑front as a trusted strategic partner. They deliver the processing expertise and compliance management that protects both them and your practice.

The cost of delay

The most dangerous approach is waiting until the situation becomes critical before making a decision. Unfortunately, this “head in the sand” approach is something I see all too often.

Legacy software doesn’t fail catastrophically overnight. It deteriorates gradually. Update releases are slow, more compatibility issues emerge, and support becomes harder to access. The world of payroll is never still, and whenever there is a need for a compliance update, it takes longer to implement. By the time forced action becomes unavoidable, you’re already operating with elevated risk and diminished efficiency.

Delaying also eliminates negotiating leverage. Whether you’re evaluating new software platforms or potential outsourcing partners, making decisions under time pressure inevitably produces worse outcomes. You pay more, get fewer concessions, and have insufficient time for proper due diligence.

The strategic framework

The fundamental question isn’t “which option is better” – it’s “which option aligns with our practice’s strategic direction?”

If payroll is core to your value proposition, you have the internal resources to manage the migration effectively, and you’re confident you can achieve meaningful efficiency gains from new technology, then migration makes strategic sense. You’re investing in a capability that differentiates your practice and drives margin improvement.

If payroll is an ancillary service, if your team’s expertise lies primarily in tax and advisory services, and if the opportunity cost of internal resources is high, or you have a small payroll team that risks “points of failure”, then outsourcing may be the strategically superior choice. You’re refocusing resources on higher‑value activities whilst maintaining client coverage and reducing operational risk.

Neither path is inherently right or wrong. But choosing between them requires honest assessment of your practice’s capabilities, strategic objectives, and competitive positioning – not just comparing software features or processing fees.

The clock is ticking on legacy software across the profession. The practices that thrive will be those that treat this as the strategic decision it actually is, rather than the technical inconvenience it superficially appears to be.