Payroll Outsourcing Services

Payroll Outsourcing Services Market Analysis and Global Outlook

• The global payroll outsourcing market is forecasted to grow by $25.96 billion at a percentage of 5–8 by 2026

• This year is a consolidation of the payroll services, as firms expand their regional capabilities and presence. Payroll suppliers are adding EOR to their services to benefit the remote workforce

• Companies are engaging with multi-country payroll providers and reducing the engagement with multiple local suppliers. It would be a key to reduce the payroll complications, reducing the cost, and keeping compliance in check

Payroll Outsourcing Global Market Maturity  

• The demand for suppliers with the latest technology or the technology that assists in multi-country payroll has been increasing. The technology has been assisting the clients in line with the compliance part. Suppliers are innovating to offer clients a one-stop solution for their payroll needs. For example, Mercans has been placed as a unique global payroll technology supplier that can assist any global payroll services delivery model, including SaaS, managed payroll, and EOR.

Payroll Outsourcing Services Global Industry Trends

• Companies are facing challenges in long-tail countries

• Companies are facing challenges with a lack of knowledge of the nuances in HR processes among long-tail countries

• The number of employees is so low. They are faced with high fixed costs per employee, as the local HR service has become exorbitantly high

• Clients are planning to invest in modern technology, particularly cloud platforms. It will assist organizations in truly automating, harmonizing, and transforming payroll into a single experience.

• Suppliers are innovating their offerings by the adoption of Earned wage access and technology that automates the payroll process

Global Payroll Complexity Index Analysis

• The payroll complexity of European countries is very high. Western European countries, like France, Germany, Italy, and Belgium, are higher than the average complexity. There is no one-size-fits model for Europe

• In LATAM, Venezuela, Argentina, Brazil, and Mexico are the countries that top the list in payroll complexity. The constant legislative changes are also one of the reasons for the payroll complexities. In Columbia and other LATAM countries, the complexity has reduced, due to the automation in payroll. It has replaced the manual process

• In the APAC region, Japan, UAE, Singapore, Australia, and New Zealand have high Payroll complexity

• The higher payroll complexity will lead to an increase in Cost Per Payslip

• Companies can consider critically, evaluating the potential suppliers‘ geographic service delivery model, particularly for the below-listed countries, to minimize the compliance risk

Cost Structure Analysis : Payroll Outsourcing Services

System Costs

• To keep up with the payroll outsourcing demand, suppliers will need to upgrade infrastructure, which will result in higher costs.

Payroll Labor and Non-Labor Costs

• An increase in salary requirement of training professionals to keep up with the changes and the hiring of new staff will lead to an increase in payroll cost.

Time Collection Costs

• With the increase in automated solutions for time and attendance services, the requirement for manual entries is decreasing, resulting in a decrease in cost.

Payroll Maintenance Costs

• The increase in infrastructure and requirement for experienced professionals to maintain it will lead to an increase in payroll outsourcing costs.

Supply Trends and Insights : Payroll Outsourcing Services

Global/Regional Supplier

Increase in the adoption of cloud technology

• Suppliers are continuing to boost automation capabilities, which include robotic process automation, artificial intelligence, machine learning, and chatbots to replace manual payroll processing activities

• Online accounting maker Xero and Gusto have announced a new partnership that will allow Xero users to have integrated access to Gusto’s full-service payroll solution.

Single-payroll processes

• Suppliers are increasing their capability to provide MCPO services to satisfy the buyers’ demand for single-payroll processes/technology across all countries.

• I Solved HCM acquired AmCheck provider to offer payroll services with offices across the US

Tier-2/Local Supplier

Increase in acquisitions of local suppliers by global suppliers

• SD Worx, the payroll supplier, has acquired HR and Payroll Software Intelligo. This acquisition has assisted SD Worx to expand its presence in Ireland.

• SD Worx has expanded its coverage in Spain by acquiring Integrho. It aims to be a leading European provider of integrated end-to-end HR solutions.

• UKG has acquired UK-based Quorbit. It’s a workforce planning solutions company that assists in labor budgets and recruitment strategies.

• Paycor HCM provider had acquired Talenya. It's an AI-driven recruiting platform that automatically sources talent quicker at a lesser cost.

Engagement Trends

• Most adopted model globally: Hybrid/partial outsourcing

• Why? To maintain the security of confidential data

• Contract length: The length averages four years.

• Pricing strategy: Pay per slip

Why You Should Buy This Report

• The report gives details on key global suppliers like Workday, ADP, NGA Human Resources, etc. including a detailed SWOT analysis.

• It provides information on the payroll outsourcing market size and Porter’s five force analysis on the developed and emerging markets.

• It lists out the key drivers and constraints of the global payroll outsourcing industry.