Your guide to outsourcing international payroll
By now, outsourcing is a common concept across the business world. However, although most people know roughly what the concept of outsourcing entails, there are still many uncertainties about what payroll outsourcing involves exactly, and how that works on an international level.
Over the years, outsourcing has become a catch-all term for a wide range of possible third-party support solutions. The main thing to bear in mind is that when your business is outsourcing, you call the shots. You choose which activities to outsource or not, and how you want to do this. For instance, outsourcing can be temporary or structural, at your office or off-site.
Here’s a useful guide to the main types of payroll outsourcing to consider:
Option 1: Managed Payroll Services
Managed payroll means that an external specialist manages your business payroll functions. The provider contractually agrees to deliver one or more HR or Payroll services in accordance with defined service levels and volumes of work. They also take on risk and accountability, including processing, compliance, scalability, and all the complex and time-consuming administrative work that goes with it. This is usually done off-site and for a longer period, which makes it a strategic choice for supporting long-term growth, including internationally.
As the business has grown across multiple locations and territories, maintaining an in-house payroll team is no longer viable, even with a functional SaaS solution for payroll in place. Juggling a variety of contract types in different time zones means that payroll processes are becoming too complex for the payroll team to handle, and there is an increased risk of security and compliance issues. Time to outsource your payroll to an external specialist.
Option 2: Comprehensive Payroll Services
Comprehensive Payroll Services go one step further: you entrust your outsourcing partner with the full responsibility for your payroll. This means your outsourcing partner will also answer your employees’ questions directly, for instance.
Want to make time to develop your recruitment and advancement policies over the next few years? Fully outsourcing your payroll is the way to go. Your HR partner will take over the payroll, automate and optimize where possible, help you to map out a comprehensive payroll strategy and report to you regularly.
You might be concerned that this type of off-site outsourcing may cause your employees to feel out of the loop. Good preparation works wonders! Clearly communicate within your organization about what you are outsourcing and why. Also be sure to share the contacts your employees can get in touch with from now on, whenever they have issues. Transparency is key. During the implementation period, your HR partner can already organize information sessions and workshops at your organization to proactively remove any doubts and start to build relationships within the business.
Option 3: On-Site Support
If your main aim is to provide your own team with more support during certain periods, you can rely on the services of your HR partner’s payroll specialists and administrative personnel, who should be well versed in all areas of HR. As an extension of your team, they will not only provide the manpower you need, but can also offer additional expertise to empower your people. They can assist you during predictable or unexpected peaks in your workload, so you don’t have to adjust your goals and schedule.
The employee responsible for your payroll is on maternity leave and your other HR colleague has suddenly come down with a virus. Now what? You can simply add a payroll specialist to your team for two days a week. And when everything gets back to normal, you can stop the extra support. As a nice added bonus: next time you have an urgent need, you can request the same people who are now familiar with your team and your organization.
While many organizations think this type of outsourcing only works as a stopgap measure, it is also a valuable option for more structural collaboration. For instance, if you experience recurring peaks in workload – at year-end or in the summer holiday period, for example – you can always have certain tasks handled by external employees.
Option 4: Payroll and Process Optimization
Payroll is bound by strict rules and fixed calculations and should therefore be one of the most standardized HR processes. This means that payroll is easier to automate than say, the recruitment process. Yet it appears that many HR departments are still (partly) sticking to manual processes and losing valuable time as a result. Your HR partner can help to fix this by reviewing your payroll and processes.
You know your payroll and associated processes could be a lot more efficient, but you’re having trouble putting your finger on what, exactly, needs to chance. You therefore request a payroll review from a HR partner to thoroughly assess your people, knowledge, systems, and processes. The review reveals some areas for improvement and is therefore followed up with a more thorough payroll audit. Together with your HR partner, you decide to optimize several processes and start with a clean slate.
A thorough analysis of your payroll processes is always a very enlightening and valuable exercise. It gives you a clear view of what is beneath the surface of a complex monthly procedure. Thanks to the inventory and documentation of these processes, other people can quickly take over if your payroll personnel are unexpectedly absent.
The end result? Guaranteed continuity of a business-critical process.
Payroll must go on
Global Payroll Week is an annual opportunity to put the world of payroll in the spotlight. At SD Worx, we have relied on our payroll specialists during the past month more than ever before.
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