Multi-Country Payroll Outsourcing an Increasing Trend for Large Multinational Companies
May 26, 2009
DALLAS & GURGAON, India–(Business Wire)–
Outsourcing of some or all payroll sub-processes in two or more countries is an
increasing trend for large multinational companies seeking cost reductions in
the current economy as well as other benefits, according to a new study by the
Everest Research Institute.
The past year has seen a noticeable growth in
interest in tackling global payroll challenges that historically plagued
enterprises. Among the buyers of outsourced payroll solutions, 44 percent of
buyers took a global approach during the 2007-2008 timeframe analyzed by the
Institute as compared to just 35 percent from 2003 to 2006.
Buyers are achieving 10-20 percent direct cost savings and, in some cases,
savings of more than 30 percent, according to the Institute`s study, HRO Market
Update: Multi-Country Payroll Outsourcing (MCPO):A New Approach to an Old
Problem. While manufacturing continues to remain the leading adopter of MCPO,
the financial services sector remains the second leading adopter despite a
slowdown in decision making processes due to the economic crisis.
“MCPO enables North America-headquartered companies a strategic option in
managing non-North American payroll requirements,” said Katrina Menzigian, Vice
President, Everest Research Institute. “Historically, multiple challenges
restricted MCPO adoption, but adoption is rising due to increased maturity of
suppliers, availability of innovative technology solutions and multiple delivery
options.”
The study analyzes MCPO across dimensions that include market overview and key
business drivers, buyer adoption, solution and transaction characteristics and
supplier landscape.
Other high-level insights from the in-depth analysis include:
* 66 percent of MCPO deals cover four or more buyer countries
* Companies find MCPO an especially attractive option for addressing issues of
complexity in the Asia Pacific and EMEA regions
* Three dominant technology models prevail, with 76 percent of engagements
leveraging an integrated hybrid technology solution
* Most buyers prefer variable pricing models and phased-in implementation in
contracts
* Supplier co-opetition is prevalent throughout the market, with partnerships
forming key components of solution strategies
* Only a few suppliers have the capability to cover a high number of countries
in each region
* Since 2007, offshore suppliers that combine ERP capabilities with a global
sourcing delivery have entered the market – and more suppliers are expected to
emerge this year
“Suppliers must continue to offer MCPO solutions that leverage buyers` existing
investments and can be implemented quickly to meet companies` needs to cut costs
in the current economy,” said Rajesh Ranjan, Research Director, HRO.
“Partnerships are important to suppliers that seek to strengthen and broaden
their service offerings, which will be important as new suppliers enter the
market and compete for market share.”
To read an extract of the HRO Market Update: Multi-Country Payroll Outsourcing:
A New Approach to an Old Problem, purchase the report, or inquire about other
research services, please visit www.everestresearchinstitute.com, email
info@everestresearchinstitute.com or call +1-214-451-3110.
Copyright Business Wire 2009
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