Payroll Outsourcing Trends, Analysis and its Imprints on Global Market

payroll outsourcing
Monisha Chaudhary
| Updated: Mar 06, 2019 | Category: Account & Closure

Job satisfaction, equitable distribution of work, timely payroll processing, gratuity, and the pension benefits are of utmost importance to the recruits. Research has found that if these things are ensured, employees tend to remain in the organization for a longer duration of time, and help upscale the reputation and loyalty of the organization.

Considering the complexities and financial investment involved in maintaining payroll management in-house, payroll outsourcing has gained prominence. It also helps companies having multiple locations across the world, with varying legalities.

Global payroll outsourcing companies are generally responsible for employee record keeping, time log management, maintaining legal compliance and checking and monitoring employee records. By outsourcing Payroll management, companies can focus their energies on their core business.

Although payroll outsourcing companies offer complete end-to-end services, companies can also opt for partial payroll outsourcing, keeping certain processes in-house as per their preference.

The outsourced payroll department operates all-pervasively and exclusively as there is always a need for a department which functions separately from the HR department’s functions of recruiting and staffing.

Trends in the Global Payroll Department

There are several trends that can be noted in the global payroll department:

  • Outsourcing Trends: Global payroll outsourcing trends suggest that more and more businesses are outsourcing payroll related activities in order to save costs, time and office space. The multi-country payroll market is growing at three times the rate of the overall market. Payroll management is comprehensive and specialized work due to which outsourcing of payroll initiative is a strategic decision for many multinational companies operating with a large employee base with a diverse set of designations.
  • Payroll dynamics: Globally recognized organizations operate a business environment which has advanced communication and work opportunities and where employees are more open to working in various regions. As per their skill set and educational relevance, the payroll dynamics are decided.
  • Timely incentives: Experts suggest that job growth and a higher rate of compensation is required as a payroll trend due to the emergence of the more challenging working environment in organizations. It is observed that the right amount of incentives and monetary benefits if given to the employees at the right and opportunistic time benefits the organization as employees feel encouraged and motivated to willingly work more.
  • Local legal compliance: Many multinational companies have an employee base which has diverse and varying ethnicities. They usually work in either different countries or from a different state and geographical location that does not fall in the vicinity of their hometown. In order to ensure that the employees remain associated with the organization, the recruiters ensure legal compliance with human resources by thoroughly processing their payrolls. This is found to further enable productivity and boost employee retention.
  • Cloud-based backup: As all other servers back up on Cloud, payroll management data is also being backed up on Cloud, ensuring that employee’ history is easily accessible as needed.

By outsourcing the payroll department, the nuances of periodic payroll revision and the development of a strategic payroll operational plan can be achieved more efficiently and professionally.

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Functioning Of an Outsourced Payroll Service Provider

Following are the steps which an outsourced payroll company follows:

  • Keeps a record: The hired agency /company maintains a detailed record of the employees in the client company and classifies them in the bracket of the time of recruitment, the CTC they get hired on, designation, and according to the time left before they retire. Maintenance of records ensures efficiency and accuracy in payroll processing.
  • Management of the time log: This function helps in the recording and calculation of employee dues and for penalties if any. Many companies hugely benefit from the levied duties and penalties which arise from either late entries, or from leaves taken more than the stipulated leaves. The biometric and digitally empowered time logs help payroll departments and agencies, to maintain adequate records for future reference.

A payroll company also functions in order to check and manage the employee records maintained by the client company. They prevent any flaws and human errors by periodically verifying the entries. Alongside this, the payroll service providers also use specialized payroll software which makes the processing faster and more efficient.

Growth and Development of the Payroll Industries

The global payroll[1]industry is aggressively emerging and growing. Many European and American companies are choosing customized payroll services. This outsourcing of services includes specialized professionals who are trained to understand and analyze the global payroll trends and their objectives.

Outsourcing of payroll departments by an increasing number of organizations is aiding the payroll sector to expand at a significantly high annual growth rate. This growth is observed across regions and countries, due to the fact that more companies are expanding base across international boundaries. The hiring of employees worldwide has additional complexities and shortcomings. Issues such as labor policy management and conversion of payroll figures are also an emerging area of concern for the payroll department.

Independent organizations providing payroll services to other organizations have professionals who specialists and experts in human resource management, taxes, government compliance, and regulations. Outsourcing of payroll services also helps businesses save a significant amount of time and effort which can be efficiently utilized in conducting growth-related activities.


Traditionally, payroll management has been an in-house component of companies, but now, payroll outsourcing plays an important part in the functioning of companies at a global level. By outsourcing the payroll management process, companies can save their time and expenses while also maintaining healthy relationships with employees and following local legal requirements.

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