Global payroll management is a lot more than just processing payroll. It’s about establishing a system of controls, processes, and procedures that enable the organization to manage its international payroll at scale with a high degree of standardization and strong centralized governance.
In the past, the only way to achieve an elevated level of standardization and centralized governance was to work with an aggregator-type solution. Aggregators are providers that, in theory, act as a single point of contact for all of the organization’s global payroll needs. They work with their own network of local partners in different countries and manage the payroll process on behalf of the organization.
Traditionally, this approach promises a hassle-free experience for the business, as everything is managed directly by the aggregator.
However, there are certain issues when working with aggregators:
- Lack of flexibility: Aggregators typically offer a one-size-fits-all approach to global payroll management. This means that payroll leaders may not have the flexibility to customize the solution to their specific needs, which can result in inefficient processes and higher costs.
- Inconsistent service quality: Aggregators work with multiple local payroll providers, which can lead to inconsistent service quality. The quality of service provided by these providers can vary widely from one instance to another.
- Higher costs: Working with aggregators can be costly, as they often charge high fees for their services. In addition, implementing an aggregator is also costly, both in direct implementation fees and in time-to-value, as implementations typically take over a year.
- Implementation time: Implementing an aggregator is a large-scale transformation project and as such the time and effort required to get it right is significant. Implementation times vary significantly depending on the size and the complexity of the project, but aggregators typically operate on a scale of months to years.
- Communication challenges: Aggregators act as a single point of contact for the organization. This means that, whenever there is an issue with a specific payroll, the ICP cannot be contacted directly, as all communication must go through the aggregator. This simplifies communication, but it also slows down response times significantly as everything is filtered through additional layers of bureaucracy.
What are the main benefits of technology-driven solutions for Global Payroll management?
As a result of these issues, and after the emergence of more advanced solutions in the last few years, many organizations are turning instead to technology-driven solutions for global payroll management, such as Payzaar’s Global Payroll Control Layer.
Compared to traditional aggregators, these technology-driven solutions bring about many benefits:
- Flexibility: Technology-driven solutions offer greater flexibility to organizations, as they allow for customization and tailored solutions that meet the unique needs of the organization. On one hand, in opposition to aggregators’ rip-and-replace approach, technology-driven solutions such as Payzaar’s Global Payroll Control Layer sit on top of the organization’s existing global payroll landscape. This allows the org to keep all systems and providers they are satisfied with, which means that the implementation process is much less disruptive. On the other hand, the Global Payroll Control Layer can be deployed modularly, meaning that the organization can choose which modules and features make more sense depending on its current layout and needs. This enables organizations to manage their global payroll in a way that is much more aligned with their specific business goals.
- Agility: One of the most important factors when making a change of providers in an organization is time to value. Completely changing the existing payroll landscape can be a very time-consuming process. By using technology-driven solutions rather than working with an aggregator, the implementation time can be shortened from over a year to just a few months.
- Control: Technology-driven solutions enable organizations to have greater control over their global payroll management, as they have direct access to their data and can make changes and updates as needed. This eliminates the need to rely on a third party to manage and access their payroll data, giving organizations greater oversight. The organization also has direct communication with all ICPs, which speeds up interactions and ensures better customer service, as local providers know that if they don’t perform as expected, they can be replaced.
- Cost-effectiveness: Technology-driven solutions are typically more cost-effective than working with an aggregator, as, rather than a one-size-fits-all solution, they offer the organization a choice of modules and features to deploy, which enables them better control over the transformation costs and can result in significant cost savings over time, as organizations are not paying for unnecessary services. Additionally, implementation costs are significantly reduced due to a lower-touch approach and more self-management of the implementation process and the solution.
- Higher degree of standardization: One of the main superpowers of these technology-driven solutions, such as Payzaar’s Global Payroll Control Layer, is their ability to connect all of the organization’s different data sources and “speak multiple languages”. Because of this, these systems offer a standardized global data format and workflow, meaning that instead of different workflows for each country, there is a unified approach that allows for easier optimization and measurement. This standardization leads to centralized governance and standardized inputs and outputs, which facilitates automation, consolidated global reporting, and integration between payroll, HR, and finance. Ultimately, the system becomes a reliable system of record for all payroll data across the organization.
So, why don’t you need an aggregator to get Global Payroll right?
The emergence of these newer technology-driven solutions for payroll management, such as Payzaar’s Global Payroll Control Layer, has made it possible to achieve a higher level of consolidation, standardization, and control than what’s possible when working with traditional solutions such as aggregators.
By harmonizing data and automating workflows, a payroll control layer can improve accuracy, efficiency, and risk management, while also providing valuable insights into the business. Compared to working with a traditional aggregator, a global payroll control layer provides more flexibility and customization, without requiring a complete overhaul of existing payroll systems.
Being able to achieve these business objectives faster, and in a less disruptive and more cost-efficient way enables organizations to allocate their resources towards more value-adding activities and achieve a shorter time to value when making changes to their payroll landscape.