If you’ve been tasked with crafting a business case for payroll globalisation and centralisation, you might have been taken aback by the sheer number of providers out there. It’s a bit like trying to find your way through a corn maze while blindfolded—frightening, to say the least!

After four decades in this industry, I still occasionally wake up in a cold sweat, haunted by past client engagements in global payroll advisory—thank you, subconscious! But fret not; my experiences, while occasionally terrifying, were also quite the adventure. When I first dipped my toes into the waters of Global Payroll Sourcing, I wish someone had given me a heads-up about the delightful ‘challenges’ that awaited.

So, here I am, ready to pay it forward. I hope this blog arms you with some handy tools before you embark on your international payroll escapade.

How is domestic payroll different from international payroll?

Payroll is payroll, right? Well, sort of. At its core, employees across the globe receive salaries in much the same way—after all, we’ve been doing this since the dawn of paid labour. Pay is simply the reward for helping your employer achieve their goals. But let’s not forget that the taxman also has his hand out, ready to take a not-so-small bite out of your earnings.

This is where the payroll function comes into play. Payroll professionals are charged with the noble task of calculating total compensation and ensuring that everyone gets their fair share: taxes and social security to the government, insurance premiums to the right companies, garnishments to debt collectors, and what’s left for you, the employee.

It’s a universal system, really. You might think that because of this, domestic payroll isn’t all that different from international payroll. Spoiler alert: it is! Complexity increases with every country you add to your international payroll project:

• No two countries have the same labour laws.
• Ensuring compliance in multiple countries is far trickier than just one.
• You’ll need to integrate additional domestic payroll systems.
• Vendor management of in-country payroll providers (ICPs) is a whole new ballgame.
• Employees expect support in their own language.
• HR and payroll metrics require a consolidated view across countries.

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However, it’s not all doom and gloom! Set yourself up for success, and you’ll soon be enjoying the fruits of centralising and consolidating your domestic payrolls into a multi-country payroll function.

What Are the Benefits of ‘Going Global’ with Payroll?

The classic “what’s in it for me?” question is easily answered here. Your vision, determination, and sheer tenacity will be rewarded in spades:

• Increased Maturity of the Payroll Function:
  • Enhanced process efficiency
  • Improved technology adequacy
  • Stronger governance
  • Better employee experience (EX) scores
• Economies of Scale, Analytics, and Harmonisation:
  • Cost savings
  • Optimised service management
  • Predictable and repeatable processes
• Enhanced Interconnectivity
  • Improved data accuracy
  • Accelerated IT efficiencies
  • Quicker delivery speeds
• Visibility and Insights
  • Central view on payroll compliance
  • Stronger adherence to global policies
  • Boosted audit scores
• Attracting Fresh (Global) Talent:
  • Governance
  • International projects
  • Analytics
  • Often viewed as a career advancement opportunity by top candidates.

With all this in mind, your business case should be shaping up quite nicely. But if you need a bit more help in crafting the strongest case possible for international payroll, don’t hesitate to reach out!

Who Are the Players in the International Payroll Field?

The landscape of international payroll providers is as vast and varied as the Belgian weather. In this fast-paced world, what you need more than foresight is insight. It’s wise to thoroughly inform yourself about who offers what, and at what cost.

Spending a couple of grand (or k euro) on an industry analyst report or consulting a global payroll sourcing expert could catapult your project into the future.

In tandem, consider:

• Conducting desktop research on payroll associations like GPA, HRO Today, PayrollOrg, and the Shared Services and Outsourcing Network.
• Inquiring with multi-country payroll outsourcing providers—but ask pointed questions relevant to your company, not vague ones about the marketplace. And while you’re at it, also ask if they can provide names of industry peers who recently undertook an international payroll initiative.
• Chatting with peers about their experiences in selecting a multi-country payroll provider.

Here’s a glimpse of the types of players you’ll encounter in the international payroll arena:

• In-country Payroll Providers: Offer payroll services primarily for one country, occasionally for sub-regions.
• Payroll Aggregators: Act as the link between multiple ICPs, using a homegrown platform to serve a range of countries.
• Business Process Outsourcers (BPOs): Go beyond payroll services to offer HR admin services, generally using in-house resources. Their support often comes from shared service centres in low-cost countries, but don’t expect a multilingual buffet. BPOs either enhance commercial HCM tools like SAP, Workday, and Oracle, or rely on their own systems. Just be prepared for a hefty price tag, as they rake in revenues from system integrations.

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Every payroll service provider has a sweet spot for customers, and here’s how that looks:

Before you send out your RFP, make sure you’ve defined which legal entities you want to include in your outsourcing initiative (if not all). Then, select the providers you want to invite to your request. If you prefer a single, Global BPO, consider asking for separate offerings for each region or even sub-region. You may discover that Global BPOs aren’t equally strong everywhere—spoiler alert!

What Considerations Should You Make When Selecting an International Payroll Provider?

Be mindful that providers have a significant advantage as they’ve been outsourcing for a living, while this may be your first foray into international outsourcing. Here’s what to expect on your journey:

• Accurate information often comes at a price and may be hidden behind a paywall.
• Providers love to boast about their strengths, but you’ll want them to spill the beans on their weaknesses too.
• It might be wise to involve a lawyer with outsourcing experience; it’s not free, but it’ll help keep your company out of hot water, and candidates will appreciate your seriousness.
• You’ll want to know the price per payslip, per month, per run, per employee, etc. Aim for the total cost of ownership (TCO) rather than just a recurring price, so you can compare it against your current TCO (and remember to baseline your total payroll costs for your business case).
• Ensure you receive the full pricing table and consultancy efforts from the provider, not just a slide with a limited view (which might just be the most ‘interesting’ one for them).
• Focus on what matters most when comparing future performance: accuracy, compliance, and timeliness. Don’t overcomplicate performance management, but make sure at least the trend is measured.

For your international payroll strategy and business case development, consider sourcing dimensions like:

• Large vs Small countries
• Rules-Complex vs Rules-Easy countries
• Decentralized vs Centralized teams
• English only vs Multi-language support
• Efficiency vs Effectiveness
• Big Bang vs Step by Step.

For cost efficiency, you might want to consider:

• An ERP vs a Core HR/Payroll System
• Customisation vs Configuration
• Non-standard integrations vs Standard integrations/interfacing
• Comprehensive vs Quick-wins
• Fast vs Slow-paced.

Other elements to include in your strategy mix might be:

• Country-specific vs Single-contract
• ‘Fixed’ vs Variable Pricing
• Vendor vs Partner.

Remember, one-size-fits-all might work for a woolly hat, but it certainly doesn’t apply to international payroll outsourcing. Especially the Global BPOs and Aggregators will try to convince you that using just one provider globally is the most cost-effective and efficient route, allowing for easy governance (the infamous ‘one throat to choke’ argument). This isn’t always the case, and relying solely on one provider globally can come with its own set of challenges. Don’t let them pull the wool over your eyes (yes, I did just use ‘wool’ twice in a payroll blog!)

Furthermore, be wary when a provider claims that international payroll outsourcing only requires an integrated payroll system for output and not for harmonised input, and/or doesn’t necessitate a transformation (🤥).

The overview table below can help you navigate your decision on which type(s) of multi-country payroll outsourcing providers to invite in the RFP for your strategic payroll initiative:

Conclusion

At Paybix, we’ve coined the term ‘glocal’ to express our belief in how international payroll should be approached.

And this is the delightful image that pops into our heads when we discuss our favourite topic:

A picture is worth a thousand words.

If you’re still hungry for more international payroll insights after my ramblings, do reach out! (I know, that pun was a bit lame, but I couldn’t resist!)

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About Paybix

Paybix offers integrated payroll solutions to multi-country employers, based on its global payroll platform Epix. The Paybix platform unifies and digitizes global payroll operations leveraging on digitized and localized payroll data exchange with ICPs. The beauty of the platform is its plug-and-play nature, allowing seamless integration with any ICP and minimizing the implementation effort to be done by payroll administrators. The platform reduces significantly the time spent on monthly payroll processing both for the employer and its ICPs and offers detailed insights into the composition and labor cost of an international workforce. Paybix has partner agreements with numerous ICPs, covering in total more than 100 countries.

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Would you like to explore the potential benefits of our global payroll platform for your organization, or could you use a sounding board for your international HR and/or payroll technology stack, do not hesitate to reach out to rudi.deroeck@paybix.eu.