What is a long-tail payroll country challenge and how to solve it?

January 5, 2023 | 5 Mins David Daly

A new discussion is emerging in global payroll, albeit around an old problem. Global companies and multinational organizations around the world now have a globally dispersed workforce-most of them already had, but as a result of the global pandemic and a significant increase in the hiring of remote workers, the workforce has become even more dispersed than ever before, and this trend is likely to continue.

As a result, payroll managers find themselves with more long-tail countries to manage-these are countries in which a relatively small number of employees are based. This presents a payroll challenge, and the company needs to engage with local country payroll providers and local expertise to ensure the employees in these countries are played accurately and in a compliant manner.

An organization could end up with several long-tail countries on their books-these countries tend not to be covered by whatever global payroll services delivery and management model the company chooses to pursue. They may outsource payroll to a big four accounting firm or engage the services of an aggregator services firm. Due to the size and location of the long- tail countries, they are more often than not, simply not covered by the reach of the big four or the aggregator. So, global companies are left with a problem-how to solve their long-tail challenge-in this article we will explore this topic in a little more detail.

Don’t ignore the long-tail countries

At large multinational organizations where the payroll is on a multicountry level and filled with complex challenges that need a payroll solution, there can sometimes be a tendency to focus on payroll processing in the larger countries first-those countries with the largest number of employee headcount or where the executive team is based.

This is understandable but definitely not advisable-today what is required is a global payroll management solution that covers all payroll countries on your books-and one that accounts for your entire workforce: permanent employees, contractors, employer of record (EoR) workers and expats along with remote workers and contingency workers.

It can be tempting to simply go out and locate a local vendor who can pay the employees in your long tail countries and worry about the management structure later. This can come back to haunt you however when it comes to reporting on a global level as well as visibility and control over what is happening with your entire multicultural payroll. You need a plan and a solution for your long-tail countries- ultimately they need to be managed the same way as any other country: the employees in the countries need to be paid, compliance and hr processes obligations need to be met, you need to report on them so you can understand and compare labor costs in those countries to other countries, and they need to be included in any process that involves standardizing the global payroll process. So, deciding to ‘fix that payroll operations problem another day’ is not the best approach.

Adopt a hybrid approach for long-tail countries

One solution is to embrace the hybrid approach to multi country payroll delivery and management. This means that you use a mix of service delivery models and any number of local country vendors that you need to pay your employees.  In fact, this approach is becoming more and more common at multinational companies as the realization sets in that there is no one single services solution to multicountry payroll. No big 4 accounting firm or aggregator services model will cover all of the countries on your books- you will always need to engage with local country expertise.

The hybrid model asserts that you engage with whatever number of local vendors that your payroll requires to cover headcount and your complete number of employees. It is not the number of vendors; it is the way you manage them. It is about ensuring that the payroll data from these vendors flows into a single location for visibility, reporting and management purposes.

What we are see more and more in the market is a mix of models: top tier countries in terms of headcount being managed by an aggregator services model, and the smaller or long-tail countries being managed on an individual basis via engagement with a local payroll provider. This can work fine as long as you have in management framework that incorporates both the aggregator services model and the vendors for the long tail countries. They need to come under one umbrella from a data and management perspective-this umbrella should take the form of technology and a global payroll control platform.

A great reason why the hybrid approach works is that it both acknowledges and accommodates local country nuance. This nuance is inevitable, and unavoidable-it is also perfectly logical. All countries are different, it’s a diverse world. So how and why would local country payroll requirements be the same? Of course, they wouldn’t- so once you accept and recognize this, your focus shifts away from trying to reduce the number of local country vendors or consolidate them down to a manageable number, and towards a global management structure that can help you manage all of these vendors that you simply cannot do without.

Those who do not recognize this new reality are simply raging against the tide and wasting a lot of time looking for a simple or mythical solution that they will never find. 2023 is just around the corner so it is time to be proactive, recognize the new normal that even the market analysts agree on-that there is no silver bullet or single provider for multi country payroll, that payroll is local and always will be, and large organizations with employees in 10 or more countries are best suited to a hybrid delivery model for multicountry payroll.

“Hybrid models cover almost half of the payroll strategy for any organization that is present in more than 10 countries”

Gartner Market Guide for Multicountry Payroll Solutions 2022

Focus on tech

As soon as you accept that it is not about the number of vendors in your network but the management structure you apply to it, you can then go about the business of finding the right digital platform and innovative technology to help your payroll teams manage it in a way that works for your business.

Start with a vendor agnostic platform- for too long you have been tied into contracts with aggregator services and other vendors, relinquishing and surrendering choice and control over your vendor network. Start by putting a stop to this and take back control-it is your payroll so you decide which vendors will deliver it in your payroll countries.

Next you want standardized data and processes for all of your countries regardless of whether payroll is delivered by the big four or aggregators or local country vendors. The data flows and pay element structures need to be standardized across all countries so that the data is extractable and comparable.

Next you want to empower your global payroll professional with innovative digital tools that help them do their job in a faster smarter and better way. They need to move out of the 1990s and work with digital dashboards, system alerts, communication tools and customizable self-service reporting.

Another key area to look at is automation-if your payroll delivery process is still relying on manual data entry and excel spreadsheets in 2023, then you have not moved with the times, and you will find your ability to manage multiple countries is hindered. The excel days are over, you need to focus on hyper automation– this is next level automation and a step up from standard robotic process automation-it is purpose built for payroll, highly intelligent and configurable.

Read about Payslip’s Automation

Bulk files containing thousands of rows of payroll data can be uploaded securely to a digital platform, then checked and validated in seconds. This saves a huge amount of time in each country pay run and immediately boosts the accuracy by eliminating the likelihood of human error.  Automated, end to end payroll processing should be a given in 2023.

You can make all of the above a reality much faster than you think on the Payslip global payroll control platform. This is the platform you need for solving your long tail challenge and managing all of your payroll countries in a single location in 2023:

    • 100% fully automated end to end payroll processing-one client of ours saved 476 hours per month on payroll processing & reporting across their 28 countries
    • Standardized data and processes-a single way of working across all of your countries including longtail
    • Out-of-the-box any point integrations connecting your payroll delivery process to your wider payroll ecosystem: HCMs, local vendors, finance and benefits providers
    • Detailed, comprehensive and consolidated multicountry cost reporting
    • Data security, privacy, regulation and compliance
    • Employee self-service access to their payslips and data

One platform for everything: all your payroll countries, all your vendors, your choice of service delivery model, all your data, reporting and compliance. For your entire workforce. This why we are the leading automation technology for the delivery & management of global payroll at large multinational companies. Payslip is where you should be managing your payroll in 2023. Your long-tail country challenge can be easily fixed-talk to our team today and take a platform tour.

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