“Companies are concerned about the costs associated with technology acquisitions and the support and maintenance of internal IT teams. Payroll outsourcing eliminates these associated costs to deliver consistent performance to companies.”
With the payroll outsourcing market size in the U.S. estimated to reach $4.8 bn in 2020, more companies are looking to outsource their payroll requirements and focus on their core business processes. Also, with more companies looking forward to cutting payroll-related costs, it is essential to stay updated with the payroll outsourcing service market’s latest trends.
Top Payroll Outsourcing Trends
Let us have a look at some of the top payroll outsourcing trends.
1. The Rise in Demand for Multi-Country Payroll Outsourcing (MCPO)
With more small and medium-sized companies doing business globally, there has been a steady rise in offshore employees and the payroll outsourcing market size. This has led to an increased demand for multi-country payroll outsourcing services as these services allow businesses to keep track of employee payroll operations across different countries. Over time as new ventures come up and expand their operations, the demand for multi-country payroll outsourcing will increase manifold.
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2. More Organizations will use Hybrid Outsourcing Model
The hybrid outsourcing model captures 72% of the global payroll outsourcing services market. The model combines the benefit of both- the captive structure and the external outsourcing structure. Moreover, it allows organizations to streamline their processes and improve their quality of services while reducing costs and providing support to employees. In the coming time, the hybrid outsourcing model will establish itself as one of the best models for payroll outsourcing.
Also, Read: 9 Pros and Cons of Outsourcing Payroll for Your Business in 2020
3. Automated Payroll Services
With automated payroll operations, service providers can reduce the time spent on keeping track of costs and on maintaining spreadsheets. More organizations are looking forward to building service delivery platforms by using new software tools for automatic payment calculations, record keeping, and deduction calculations.
4. Shift to Cloud-Based Payroll Software
Surveys suggest that companies are willing to move to cloud-based payroll software for their benefits such as scalability, security, easy access, functionality, and low costs. The software helps businesses manage employees’ reductions and increments with more accuracy. Moreover, cloud-based payroll software includes automatic and software updates that help companies keep a close track on tax compliance and other regulations.
5. Increase Employee Self-Service (ESS) for Outsourced Payroll Services
Many organizations are looking forward to employee self-service (ESS) within the human resources and payroll management markets. This allows employees to have direct access to their HR and payroll records. With ESS, employees can view and download payroll-related forms, keep track of holidays, and manage payroll information. ESS eliminates unnecessary administration work and enables HR to be more efficient and productive. Moreover, these services are leading to a steady increase in the payroll outsourcing market size.
6. Demand for Robotic Process Automation
Robotic Process Automation (RPA) is an effective way to automate repetitive and rule-based processes. The process is carried out via automated scripts owing to which the speed and accuracy of payroll services increase dramatically. Moreover, RPA is cost-effective and simpler to implement and is gaining popularity among payroll outsourcing services providers.
7. Integrated Payroll Platforms
With modern payroll requirements becoming more fragmented, the use of integrated payroll platforms is rising steeply. Integrated platforms allow both employees and employers to manage their salaries, insurances, pensions, records, and taxes. This helps them stay updated about their finances and work on improving it.
8. Real-Time Payroll Analytics
With enterprises and organizations using real-time payroll analytics to make business strategies, the demand for payroll analysis will continue to grow over time. It analyzes the various aspects of business operations, such as profits, team management, and staffing deployment. Thus, helping companies work on the right growth metrics and provide better services to employees and customers.
9. Cost Reductions
Cloud computing technologies will reduce the cost of payroll outsourcing services in the coming years. This will further make the global payroll outsourcing market competitive, increase the efficiency of products, reduce administering work involved in payroll operations, and increase the payroll outsourcing market size.
10. Enhanced Data Security
Companies outsourcing their payroll data to a provider need to make sure that the employee data is held in a secure and encrypted system. Payroll outsourcing service providers should have a comprehensive knowledge of data security measures that impact not only the payroll systems but also the HR, tax, finance, and other key functions. With more companies looking forward to payroll outsourcing services, there will be an increased demand for better data security and ways to tackle cybersecurity threats.
11. Integration with Careful Planning
Several companies have lost valuable data while shifting to cloud services as they did not have a proper backup system in place. Subsequently, organizations are planning their integrations more carefully than ever before to avoid any last-minute payroll changes.
12. AI and Machine Learning Lead the Way
Several organizations are starting to put Artificial Intelligence(AI) strategies in place for their Payroll and HR teams. Also, many consumers wish that companies provide them with more robust and AI-based solutions. Thus, more companies are investing in AI and machine learning to support and guide clients in this area.
13. Demand for Financial & Legal Payroll Service Providers
Organizations are looking for providers who can help them tackle legal and financial challenges such as Gross Domestic Product Ratio(GDPR) and international data requirements. Thus, payroll service providers who provide these services have the edge over companies who don’t offer them. As the payroll outsourcing market size continues to increase, there will be a steady increase in providers who can assist companies in dealing with legal and financial challenges.
14. Smooth Information Exchange
More HR leaders are now sharing their best practices with their peers. This allows businesses to seek out information and get an expert opinion and peer experience before finalizing a payroll service provider. The sharing method will help reduce the number of consultants in the field of HR and help organizations streamline their payroll practices.
The payroll service is ready for a significant shift, and companies are working tirelessly to keep with the latest trends.
Did we miss out on any key aspect? Let us know in the comments section below!
A logophile by heart, Supriya loves to research and write about the latest technology and trends. She believes that writing is the best medium to influence people in a positive way and has 3+ years of writing experience.
