On-Premise HRMS: Feature, Uses, Advantages and Disadvantages

HRMS software is a vital tool in the management of people, payrolls, attendance and performance. When selecting an HRMS software, it is important to decide whether you want a web-based system, or a on-premises HRMS.

While cloud-based HRMS is popular today, on-premise HRMS still holds strong value for many Indian businesses–especially those who require strict control over data and customised workflows.

This article explores the advantages and disadvantages of on-premise HRMS for Indian companies.

What is On-Premise Human Resource Management System?

A on premise HRMS software system is one that is installed on the company’s servers or local infrastructure. The software is installed on your company’s servers or computers and managed within the office network.

An on-premise system is not accessible via the Internet, unlike cloud-based HRMS. It is typically maintained by an in-house IT team, and you have full control of your data and customization.

Examples Of On-Premise HRMS In India

• SAP SuccessFactors (on-premise option)
• Oracle PeopleSoft
• Ramco HRMS (hybrid deployment)
• Zoho People Plus Limited (On-premise Options)

Benefits of an On-Premise HRMS

Here are the top reasons that Indian companies prefer on-premise solutions for HRMS.

1. Complete control over data

All employee data is stored on the servers of your company in an on-premises setup.

Useful for:

• Employers with sensitive payroll or HR data
• Businesses that have strict policies on data privacy and internal security
• Organisations government and financial institutions

No third-party cloud service provider is required for backup or storage.

2. More Customization

On-premise HRMS can be deeply customized to meet your company’s HR processes, approval flow, and compliance structure.

Best for:

• Large companies with complex policy
• Organizations with unique needs for reporting or evaluation

Developer help allows you to modify workflows, modules and even create new features.

3. Purchase One Time Model

Many on-premise HRMS offer life-time license for a one-time fee instead of monthly or annual subscription fees. It can be cheaper in the long-term for large companies.

Good for:

• Established companies with plans for the long term
• Software that businesses prefer to own rather than rent

4. No Internet Dependency

It is not necessary to have a high-speed internet connection in order to use on-premise HRMS. It runs within your local network so downtime caused by internet failure is minimal .

Useful for:

• In areas with limited internet connectivity, factories or offices are located in these areas.
• Secure environments where Internet access is restricted

5. Data security (internally managed)

Internally managed and secured on-premises systems. Businesses can create robust firewalls and backups with a trained IT team, as well as strict internal policies.

Ideal for:

• Defense, banking or legal firms
• Organizations with internal Data Sovereignty Requirements

The Disadvantages Of On-Premise HRMS

Despite these benefits, on-premise systems come with certain challenges–especially for modern, agile, and fast-scaling businesses.

1. High Initial Cost

A large investment is required for on-premise HRMS. You will need to buy:

• Software License
• Hardware and servers
• Backup systems
• IT Team or Consultants

It is difficult for:

• Small businesses or startups with limited capital

2. Needs in-house IT expertise

Maintaining and running an on-premises HRMS requires the following:

• Servers and installations are handled by IT staff
• Database Administrators
• Updates and bug fixes for software

Not suitable for:

• Businesses without IT departments
• Businesses who want to be hands-off

3. Upgrades to complex software

Your team will need to manually install any software patches that are needed when there is an update in the law, or a new HR feature.

It is time-consuming and often delayed
Missed updates may lead to noncompliance of PF, ESI or tax laws

4. There is less flexibility for remote work

On-premise HRMS works best in your local office network. Remote access is enabled by:

• VPN Setup
• Extra firewall rules
• Security audits

Inconvenient for:

• Companies with hybrid or remote teams
• Employees who work from home or the field

5. It is difficult to scale quickly

Scaling on-premise HRMS is a good option for companies that are growing quickly.

• Additional Servers: Buying them
• New licenses can be obtained by contacting the licensing department.
• Setup new users or locations manually

Not suitable for:

• Startups growing from 50 to over 500 employees in a short period of time
• Businesses planning global or multi-city expansion

Should you choose an on-premise HRMS?

The best suited for:

• Large companies with more than 500 employees
• Strong IT Infrastructure
• High-security companies, government departments, and the defence industry
• Firms needing custom-built HR workflows

Should you avoid on-premise HRMS?

Not suitable for:

• Startups and SMEs on a tight budget
• Businesses with distributed teams
• Businesses that need automation and quick setup
• Teams without IT professionals

Final Thoughts

Although most Indian businesses are moving to cloud based HRMS there is still an argument for systems on premises. This is especially true in sectors where strict privacy, deep customization and internal control over the long term are required.

An on-premises HRMS may be the best option for large organisations that value data privacy, stability and custom workflows. If you’re looking for cost efficiency, remote access and faster deployment then cloud-based solutions like Keka or Zoho People may be the best option.

The choice between an on-premises and cloud HRMS is ultimately based on the size of your business, your IT capabilities and long-term objectives.