HRO Today Forum Europe Highlights
Multiple Countries, Multiple Considerations The benefits, challenges, and strategies for outsourcing global payroll. By Carsten Staehr According to many recent surveys conducted by the likes of Ernst & Young and Gartner, the trend towards multi-country outsourcing is on the increase. Why is this? One of the overriding reasons to outsource is the need to gain better cost control. This in itself can have a variety of drivers: • Lowering the total cost of ownership;
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Ineffective internal reporting;
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Governance issues;
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Lack of standardisation; and
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Increased cost.
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Providing flexible adaptation of costs (to service the likes of restructuring, mergers and acquisitions, reductions, and its more positive counterpart, expansion); and Allowing organisations to focus on their core business (together with the perception that outsourcing can bring increased expertise and added value to the party).
There are many other important factors which are driving organisations to outsource HR and payroll services at a global level: • • • • •
Reducing risk and liabilities; Maintaining compliance complicated by ever-changing legislation; Ensuring consistency; Streamlining processes; and Accessing and aligning data.
The Challenges Historically, organisations have outsourced payroll on a countryby-country basis, resulting in: [32]
HRO TODAY GLOBAL
| WINTER 2014
Many companies are now going to market for a second time, looking for a solution, but are unclear of what they actually want. Adding to this, the market itself is confused, and ultimately, there is no one global solution for payroll. Confusion stems from several factors. Knowledge and acceptance of outsourcing varies by country. For example, France is less familiar with outsourcing and has a low usage rate. Experience and expectations should an added consideration. Terminology also adds to the complexity of defining and providing an outsourced service. We all use the same words—payroll, HR, managed services, and business process outsourcing—but they can mean different things to different people. There is no common framework across countries, and this can also contribute to the confusion when determining requirements. Add to this the individual legislative complexities