The future of multi-country payroll
Gartner published the Market Guide for Multicountry Payroll Solutions in 2020, outlining many of the key trends affecting the global payroll industry today. Their detailed analysis and data supported conclusions provide a really comprehensive insight into the global payroll landscape today as well as the future focus of global employers.
It indicates a strong move towards investment in a technology or process that can serve to unify multi country payroll and significantly trim down on the number of vendors utilized to deliver global payroll. This is likely in response to the growing need to manage ever growing complexity at multinational corporations where rapid scaling and growth rates have led to complexity and workloads that are becoming increasingly unmanageable.
In this article, we will look at what this move might mean for multinational companies in the market as well as payroll vendors. It has implications for everybody involved in global payroll and may even be considered a call to action for many who operate currently with multiple vendors and complex data flows as part of their delivery of multi country global payroll.
Multinational companies are facing unprecedented levels of complexity when it comes to their global payroll processing. Many are now of the view that their best course of action is to reduce the number of vendors they utilize and they are looking to see where they can consolidate services or alternatively, implement a technology solution that can bring different vendors into one overall platform for ease of use and greater control.
Rapid company scaling has resulted in global payroll departments seeking out in country expertise in the new countries the company has scaled into -it has simply been the case that employees in these new countries need to be paid and the global payroll team needs to set them up on the books and get things moving as quickly as possible. But it has become clear that this is an unsustainable process and companies are left with too many vendors delivering payroll via non-standardized processes.
The flow of data between the global payroll team and the various vendors along with other members of the ecosystem such as the HR and finance department has grown to unmanageable levels and there is now a pressing need for a solution. Restricting or limiting the number of vendors to a smaller number only works if these vendors have the processes, technology and capabilities to deliver global payroll across multiple countries. If not, a technology solution will be required-one that is capable of accommodating these vendors or unifying them onto a single platform.
The complexity referenced above goes hand in hand with heightened risk -global payroll data is sensitive by nature and is also subject to robust data security and privacy regulation. It is much easier for multinational organizations to meet these regulations if they are not burdened by a process that involves them managing multiple vendors with different data flows on separate platforms.
Compliance is also a major priority at multinational organizations, and they have several obligations when it comes to payroll data and reporting. It is increasingly difficult for a global payroll manager to know if they are compliant in a specific country -usually they lean on the expertise of the local in country vendor to help them in this area but visibility and control is hard to achieve with multiple vendors scattered across different countries and regions. Usually, there is no standardization of the process with these vendors -so a global payroll manager is forced to assess compliance adherence on an individual country or vendor basis. Understandably, there is huge scope for human or process error here and it is not a sustainable process in the long term.
Financial penalties for breach of compliance or country specific regulations are increasing in their severity and compliance risk is now something that needs to be monitored very closely. Global payroll managers are looking to mitigate this risk with a reduced number of vendors or an improved selection of digital tools that can deliver the kind of comprehensive reporting that can alleviate any concerns around compliance.
It is now well established that standardized processes and data can lead to significant improvements in the delivery of global payroll, especially multi country payroll. A decrease in the number of vendors in use coupled with technology that can introduce standardization across these reduced numbers is something of great interest to global payroll departments today.
Global payroll professionals working in different countries but adhering to standard best practices are much more empowered to meet deadlines with accuracy. With standardized processes and data flows, there is much greater scope for an individual in one country to process and deliver global payroll in another. Greater efficiency and streamlined activity can be the result, and fewer vendors would make it easier to apply and monitor standardization practices.
Intelligent standardization also helps to connect people, process, data, vendors and technology in a way that empowers global payroll teams, centrally and locally, to deliver global payroll in a more efficient way as it serves to cut out a lot of the complexity associated with the multi-vendor landscape.
Standardized processes also serve to help integrate local country expertise into an overall process but at the same time reduce the dependency on localized processes which may have proven in the past to obstruct the transparent delivery of global payroll.
Supporting digital transformation
And over reliance on a complex network of disparate vendors spread across territories makes it difficult to apply a level of digital transformation across an entire business function. Having multi country payroll solutions better supports a digital transformation of global payroll, human resources or finance departments. It is inevitable that data and processes across these departments are interlinked and working with a more manageable number of international vendors makes it easier to introduce the kind of digital processes that link these departments in an efficient way.
In many ways, unifying multi country global payroll is a form of digital transformation in itself. It serves to align processes, create some standardization and introduce innovative digital tools to streamline workflows for greater efficiency -this is what digital transformation is all about, and the global payroll department is an obvious candidate for a digital upgrade.
For too long global payroll has relied on manual processes and legacy technology that is no longer fit for purpose -a digital transformation can genuinely assist global payroll professionals with the delivery of their day-to-day duties and also support the wider organization with any growth plans. When it comes to scaling into new countries, a global payroll department that has undergone a digital transformation will be in a far stronger position to hit the ground running in a new territory with standardized processes and advanced digital tools to help on board, integrate and pay new employees. In this way, the global payroll department becomes an enabler of innovation instead of a blocker to progress.
Digital transformation will also support the production of global consolidated reporting -as the company grows and develops, the amount of employee data grows too, and it requires digital tools to both manage the data and extract relevant reporting from it.
Unifying multi country global payroll with innovative technology and a reduction in the number of vendors leads to a more manageable global payroll process. It gives global payroll managers increased visibility and control over their data and processes while also making it easier for a company to meet its compliance obligations.
All of this serves to future proof global payroll within an organization- if you are working with innovative tools on modern platforms, and you have made an effort to reduce complexity by restricting the number of vendors who operate within it- then you are working within a manageable framework that is future proofed and sustainable. Modern digital tools mean an element of flexibility and agility is introduced into the process, allowing the department to respond effectively to new market conditions or demands brought about my company growth.
A multinational company with a future proofed global payroll process is ready for whatever is coming down the line because it has taken the time and effort to empower its global payroll professionals and introduce technology that can meet new challenges.
Using Payslip, we can manage all our payrolls across nine in-country vendors on one platform. When the global Covid-19 pandemic arose, it was not an issue from a payroll perspective, and critically getting everyone paid. The Payslip platform enabled continuity for our international payroll service including the fast and seamless implementation of the Payslip Employment Self Service during this time.
Payroll Manager, LogMeIn
Payslip as a technology platform has added a missing piece in our payroll set-up. As an international company with offices in 16 countries, it’s important to us that every employee at GetYourGuide has the same great experience when accessing their pay data.
At the same time, we work well with smaller local payroll providers, supporting us with direct local expertise in their countries. We were able to combine those two elements by placing the Payslip platform in the middle, to simplify reporting and communication with local providers, and to have one simple employee-facing solution across all locations.
Head of HR, GetYourGuide
With business and employee growth rates of above 50%, we rely on our vendors to deliver on time, every time. Payslip’s workflow automation, enables Phorest to manage our payroll provider process – data driven, real time and transparent. Payslip saves us time so we can focus on our business growth.
International Payroll Manager, Phorest