HR outsourcing in Nepal — what to outsource, what to keep in-house
Outsourcing the wrong parts of HR is how you build a compliant company with terrible culture. Here's a clean framework for what to hand to a Nepali provider and what to keep close.
'How much of HR can I outsource in Nepal?' is a question I hear from foreign-backed startups and from Nepali family businesses alike. The right answer isn't a percentage — it's a split. Some parts of HR are transactional and should absolutely be outsourced. Other parts are cultural and shouldn't be outsourced by anyone at any size.
- Payroll processing and payslips
- PAN, TDS, SSF, festival, gratuity filings
- Leave and attendance records
- Statutory contracts, offer letters, employee handbook v1
- Background verification and reference checks
- Benefits administration (health insurance, provident fund top-ups)
- Recruitment sourcing (junior/mid roles) if you lack in-house capacity
- Compensation philosophy and bands
- Performance calibration and ratings
- Promotion decisions
- Hiring decisions (final say)
- Firing decisions and hard conversations
- Leadership development and manager coaching
- Values, rituals, all-hands rhythm, engagement action
Companies that outsource the wrong layer end up compliant on paper and hollow in practice — the vendor optimises for what it can measure (turnaround, filings) and the founder loses the plot on what actually drives retention.
- Local payroll bureau — cheapest, handles PAN/TDS/SSF and payslips well. Weak on advisory. Fee: NPR 800–2,500 per employee per month.
- EOR (local or global platform) — full transactional layer plus legal employment. Fee: USD 199–599 per employee per month.
- HR consultancy firm — advisory + project work + occasional recruitment. Fee: retainer NPR 100k–400k/month.
- Fractional HR advisor — embedded senior person 1–2 days a week. Fee: NPR 200k–500k/month or USD equivalent.
Most companies under 50 people end up with a combination — payroll bureau or EOR for the transactional layer, plus a fractional advisor for the strategic layer. The two together usually cost less than one mid-career full-time HR manager and give you better outcomes.
- Payroll/EOR: monthly SLA, named account manager, quarterly compliance report, exit terms with 30-day handover.
- Advisor: 6-month rolling engagement, monthly deliverables list, right to terminate with 30 days' notice, documented handover of all artefacts (policies, comp bands, playbooks).
- Data: you own the employee data, always — insist on export rights in every contract.
- Confidentiality: NDA covering employee records, compensation, and any performance data the vendor touches.
- Statutory filings are on time every month with zero founder involvement.
- New joiners are onboarded within 3 working days of accepting.
- Exit interviews and final settlements close within 15 days.
- You spend zero time on payroll queries and 80% of your People time on hiring, performance, and comp — the cultural layer.
- Your advisor writes things down that survive their departure.
Consider a 25-person B2B SaaS company in Lalitpur, half engineering, half GTM, foreign-invested with a US parent. A typical, well-run outsourcing split looks like this:.
- Payroll and statutory filings (PAN/TDS, SSF, festival, gratuity) — handled by a Nepali payroll bureau at roughly NPR 1,200 per employee per month, closing by the 7th of every month.
- Employment contracts and handbook v1 — drafted by an outside employment lawyer, then owned by the CEO and updated once a year.
- Health insurance and provident-fund top-ups — broker-run, reviewed at renewal by the CEO plus fractional advisor.
- Recruitment sourcing for junior/mid roles — split between a local recruiter (contingency, 15% of annual salary) and internal referrals.
- Compensation philosophy, bands, and annual review — owned by the CEO with a fractional HR advisor two days a month.
- Performance reviews, calibration, and promotions — run by the CEO and engineering lead; advisor facilitates the calibration meeting.
- Hard conversations (PIPs, exits, disputes) — CEO owns, advisor coaches.
- Culture (all-hands, offsite, values rituals) — owned by the founders, never delegated.
Fully-loaded external HR spend for that company sits around NPR 350,000–500,000 per month — roughly the cost of a mid-career full-time HR manager, but distributed across a payroll bureau, a lawyer, a broker, a recruiter and a fractional advisor. What the founder gets in return is senior-level thinking on the strategic layer plus zero personal exposure to payroll operations.
- Outsourcing the cultural layer to save money — the vendor cannot care about your company the way an owner does; performance and comp decisions leak trust the moment they feel outsourced.
- Keeping the transactional layer in-house 'because it's sensitive' — filings get late, mistakes get personal, and the founder becomes a payroll clerk.
- Signing a bundled deal where one vendor does everything — you lose the ability to swap out a weak function without unwinding the whole relationship.
- Not documenting anything — the day the vendor leaves, the knowledge leaves with them. Insist every playbook, policy, and comp band lives in your systems, not theirs.