Why the service Aggregator model is the past

September 7, 2021 | David Daly 5 Mins read

The legacy service aggregator payroll model has been around for 50 years now and while in the past, it has proven value in helping to get employees paid on an international scale, it has not adapted to solve the payroll complexities of today and this is causing global employers to seek alternatives ways to manage and deliver their multi country global payroll.

In this article, we are going to take a look at the reasons why multinational companies are moving away from a payroll model that has failed to move with the times and meet the new and varied demands being faced with the day-to-day delivery of multi country global payroll. We’ll then look at a more progressive solution which is the future of global payroll management.

One size fits all limitations

While some of the aggregator service providers out there in the market will make claims around customization and their ability to facilitate specific employer needs, the reality is that they view and treat all multinational companies the same, and only offer a restrictive one size fits all payroll services model. Their goal is to supply a similar level of technology and professional services to multiple different organizations around the world. This allows them to implement a straightforward service delivery strategy while managing their costs and optimizing their profits.

This strategy does not work for global payroll delivery which has moved on in recent years, has become much more nuanced and far more complex. There are many more local country payroll providers in the market that need to be managed, there are multiple payment currencies, a different selection of detailed reporting is required, and legal & compliance legislation has changed dramatically.

Things are simply far more complex than they were and there are a lot more moving parts that need to be managed. This is a natural and successful progression for many companies, they expect to grow and enter new markets and countries, they understand that this will involve payroll management challenges and they’re looking for payroll solutions that can help them scale with speed and agility.

The aggregator services payroll model was simply not designed to manage this level of complexity or help companies grow, and today it struggles to meet the new demands being placed on global employers when it comes to the delivery and processing of international payroll across several different countries and continents.

The service aggregator approach to payroll simply does not go far enough and global employers are seeking alternatives in the form of technology platforms which are more suited to their specific needs as well as their longer-term growth efficiency objectives. Today, there is a pressing need for a technology solution that is different and better, one that is designed specifically to tackle the variants that make up multi country global payroll delivery.

Not enough local vendor choice

Global employers today want to deliver and manage global payroll on their terms- they do not want these terms dictated to them by a business model that limits their access to local country expertise.

The nature of the aggregator model is to outsource the actual payment processing in specific countries to a network of local country providers who they manage. This comes with limitations- if a global employer is currently moving into a new country that is not covered in this network, then they lose out. Moving over to an aggregator services model also means sacrificing control and sacrificing any positive relationships that may have been built up with local providers over the years- if these providers are not within the aggregator model, then the global employer is unable to continue their relationship with them.

Many employers report that this is an unsatisfactory situation, they want to keep existing relationships as well as technology infrastructure that is still working well- a move across to an aggregator services model represents a rip and replace project that can be costly and time consuming.

Instead, they want flexibility and a global payroll technology platform that allows them to bring any vendor they choose onto the platform with the added flexibility that they can swap out underperforming vendors or change vendors anytime they want. The value of this becomes clear when they want to enter a new country rapidly- they can simply onboard a new vendor onto the platform and not have their growth efficiency progress blocked when their preferred vendor does not form a part of an aggregator model network that they are tied to.

Lack of operational visibility

Global employers demand control- it starts with visibility over operational processes and vendor performance- without this, they’re kind of flying blind and unsure about what is working and what is not- it’s a risk management concern.

Under the aggregator services model, the global payroll professionals working in the employer head office, have little or very limited contact with the local country vendor professionals who are processing payroll on a monthly basis. This is because, the local country vendor relationship is handled exclusively by the aggregator who subcontract or outsource the actual payroll processing to the vendor and act as a middleman between the vendor and a global employer.

The result of this is a lack of visibility and control over payroll operations and poor insight into local vendor performance when it comes to delivering essential payroll delivery services. This is an unsatisfactory situation for a global employer who wants to have control over their selection of local providers, access to the global payroll professionals working inside them, and visibility around how well they’re performing.

Doesn’t meet reporting requirements

The aggregator model is a functional model built around service delivery. It was not designed to deliver detailed, sophisticated and comprehensive multi country reporting that helps leaders benchmark and understand the value of their payroll processing over a period of time.

But global payroll has changed over the decades and this business-critical service now requires a lot more detailed analysis than it perhaps did 20 years ago. There has been an explosion in the amount of data involved in payroll processing, and this data can reveal a lot about the financial health of an organization. After all, global payroll is often the single largest expense that any company will have, so it is always important to have a good handle on this cost via accurate and detailed reporting.

More and more these days, global payroll data and reporting is playing a significant role in strategic direction and executive decision-making as business leaders look for a competitive advantage. Sometimes this data is buried underneath a manual heavy process and the absence of smart digital tools to release it.

C-Suite executives and leadership teams at global organizations need to see this data in a digestible format that tells a story of what is happening across all of their countries when it comes to labor costs and profitability. What is required here is a digital reporting tool designed specifically for global payroll reporting that enables a macro to micro analysis of global payroll costs along with the ability to filter down into key payroll elements such as company, country, employee and benefit.

The future is a global payroll control platform

The Payslip global payroll control platform meets the new needs in the global payroll market that global employers are experiencing. It automates and standardizes payroll data and processes for greater operational efficiency which results in visibility and control.

It allows global employers to pick and choose which vendors they want to work with and change them anytime they want-it is a vendor agnostic digital cloud platform. It comes with an advanced suite of reporting analytics and digital reporting tools that can satisfy the reporting needs of a range of different stakeholders in the global payroll, HR and finance departments.

It integrates seamlessly with key players in the global payroll ecosystem such as HCMs and financial software packages while also offering an employee self-service portal. Digital audit trails and compliance calendars enable multi country payroll compliance, and the platform operates on a unified data first approach, meaning global employers will soon be growth ready and new countries can be added easily. On the Payslip global payroll control platform, companies benefit from:

Standardized data and process is across countries
Automation to replace manual entry
Consolidated multi country reporting
Digital audit trails for compliance
Integrations , with ICPs/Aggregators/HCMs & ERPs
A scalable payroll model to support growth ambitions

This is a huge plus for multinational companies who are looking to grow efficiently and quickly into new countries, secure the best local talent and carve out market share. They need a technology partner and a payroll platform that can help them grow on their terms with speed and efficiency.  If this is what you would like your global payroll operational model to look like, then talk to our team today who will be happy to show you a demo of the platform and talk you through just how quickly you can be up and running on it.

 

For information on the Payslip Platform contact us today.

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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.

Colin Smith

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.

Julian Fichter

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.

Ana Kelly

International Payroll Manager, Phorest

Payslip positions your team for success, and allows you to onboard hundreds of people when you need them very quickly and efficiently, in the same way for each country. The uniformed approach empowered our payroll teams to keep pace with our business.

Payslip also made our payroll process entirely transparent, which is invaluable to our payroll teams as we continue to grow and scale at such a rapid pace.

Travis Saville

HR Systems Lead, Wave