ERNST & YOUNG SRL

  |  2013-05-10

Global payroll - Myth or reality?

The global payroll landscape has continued to change dramatically over the last 10 years. New providers, technology, vendor service delivery models and global capabilities have made payroll administration possible, at least conceptually, across complex global organizations.

Given this environment, our clients often ask us if one organization can provide a truly global payroll solution. In other words, is global payroll a myth or a reality?

 

We decided to seek some answers by starting with just a single question on LinkedIn to find out if client and vendor organizations believe a single, consistent global payroll model exists:

 

 

Do you believe there is a single provider in the market today, regardless of the service delivery model, that can support the payroll needs of a global enterprise actively engaged in 90+ countries?

 

The responses were almost evenly divided: while service providers strongly believe that global payroll was a reality, most organizations (or buyers) strongly disagree.

 

One could easily debate the point from both sides. Organizations (buyers) are looking for the confidence delivered by a truly global service delivery model using standard, consistent systems and processes that are compliant with local regulations delivered by a single global company. Service providers (vendors), however, argue that they can deliver the best solution for their customers by diligently managing and overseeing their global network.

 

As a result of these opposing perspectives, Ernst & Young sponsored this survey to gain a better understanding of how organizations perceive global payroll within the context of their cultures and governance models. The survey focused on the experience of organizations with delivering payroll either in-house, via external vendors, or a hybrid of both. It was designed to understand the operations and processes currently in place in multinational organizations and to explore what might be needed in the future.

 

The Ernst & Young Global payroll survey was conducted via live telephone interviews targeting global service providers (vendors) and organizations (buyers) in 16 countries across 5 continents.

 

Whether global payroll is a myth or reality, the fact is organizations, both public and private, need to pay their employees in a timely, accurate and compliant manner. Thus a question remains: what are the best practices for multinational organizations, especially those entering new or perhaps emerging markets? This report seeks to address this question and reveals that some global organizations are moving to adopt a standard approach. Other companies, however, show a strong reluctance to transform payroll operations to adopt a single global approach.

 

Our survey also determined the payroll function is housed primarily in human resources (HR) or finance. Regardless of where it is located, however, payroll represents a vital function to the organization and its reputation cannot be understated. This report will assist HR, Finance, Tax and Payroll directors in determining the right questions to ask within their organization when assessing the business needs of their payroll model. It also addresses expectations of the payroll outsourcing market. We will address the following questions and more: what will the continuing complexity of business expansion plans and the resultant impact on payroll reporting have on future operating models? Will increasing automation and employee self-service and mobile technology expectations drive the next wave of technology development?

 

This report shares the results of this survey together with insights from experienced Ernst & Young payroll professionals.

 

Finally, we hope this survey and insight provide you with information to assist you with your payroll delivery model. This report and others are part of our series of Human Capital research thought leadership. Other Human Capital research can be found at www.ey.com/gl/en/ services/tax/human-capital/services---human-capital.

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