Right now, businesses across the globe face many challenges. The global war on talent, economic and inflationary pressures, wage and energy spikes, as well as the continued high pace of digital and data-led transformation, which is going on across many industry sectors. Reducing costs are in the cross hairs, as is a need to focus on core business. It’s why periphery services are in the firing line.
Outsourcing non-core business services is an increasingly attractive option, it was used extensively by companies in the wake of the 2008 global financial crisis, helping companies stay afloat during the turmoil. Payroll, which is often a company’s biggest expense is in the crosshairs. The outsourcing services market for payroll is estimated to grow by nearly 6% a year up to 2027.
Right now, there is growing demand to reduce payroll-related costs and boost payroll cost visibility. There’s also an increasing need to standardise processes, technology, and governance. This is why Zalaris, a global provider of multi-country payroll and cloud-based HR services is showing double digit growth. Many businesses are consolidating how they pay their workers across multiple markets.
One of the trends we’re seeing is a need for a common, fully automated, payroll solution that is operational across all the countries where an organisation operates in.
This provides multi-national companies with consistency and cost savings. There is now a long-term move by many organisations to offer employees more self-service,
explains Hans-Petter Mellerud, founder and CEO of Zalaris.
“We are also seeing large enterprises in this phase of the economic cycle re-evaluate their corporate structures. They are rationalising their organisations, cleaning up their portfolios and aiming for a core focus for each business unit, in order to simplify life for investors and stakeholders. This can involve spinning out new businesses, each of which needs a new plug and play payroll solution.”
Outsourcing tackles many business challenges
Geopolitical tensions, rising protectionism, as well as near or friend-shoring are also straining globalised commerce. Equally multi-country firms are thinking more expansively as to what can be done in house, offshored or outsourced, whether it’s IT services, business payments and accounting or HR services.
“When times are tougher, corporations need to guarantee cost reductions, focus on what makes them money, as well as transform fixed costs into variable ones, boost KPIs, such as revenue per employee and remove people from their accounting books. Outsourcing and payroll as a service provides this opportunity. It is why we’re seeing companies who would not normally consider outsourcing now asking about our services,” details the CEO of Zalaris.
The global war on talent is also disproportionately affecting payroll and HR employees. Many dedicated workers in this sector are in their 50s and 60s across the globe’s developed markets. They will retire soon and are not bring replaced by a broad pipeline of talent in this industry.
“It is therefore imperative that businesses outsource and automate their payroll in order to access talent, systems and processes,” specifies Mellerud. He adds: “The other major factor that’s impacting HR services is business transformation as corporations evolve to become data-led and digital first.”
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The rise of the fifth utility
Societies from Europe to North America and Asia are now digitalising at pace. Governments and tax authorities are also increasingly digitally driven in order to save money, resource and time. Businesses need to integrate with these systems, yet this increasingly requires investment. It is therefore easier to outsource such competencies.
“Increasingly large enterprises cannot succeed in a vacuum, they must be ecosystem players accessing skills and capabilities beyond their offices and factories. This is the way businesses will future-proof themselves. By investing in those that invest heavily in building competencies in specialist business functions. It is why outsourcing is going through a significant pivot point, particularly in payroll and HR services,” points out the founder of Zalaris.
There will come a time when payroll, and how we are renumerated for work, is treated like the fifth utility, after water, gas, electricity and the Internet.
Mellerud envisages payroll, the vast majority of which will be automated and self-service, working just like an electric plug in the wall or turning on water from a tap. Businesses shouldn’t need to worry about maintaining and servicing this fifth utility. It should work efficiently, be there when you need it and happen automatically.
“There are few companies today that think about building their own power plant or water reservoir, every corporation buys this in now, as a service. However, there are increasingly smart and value-added services around say energy and water consumption, which optimise its use for businesses. This is how we envisage payroll and HR services in the 21st Century, as the fifth utility,” he explains.
This is where the power of real-time data comes in for payroll. Data analytics has a lot of potential in the years ahead. Businesses want more access to HR data in order to analyse trends, understand the war on talent and attrition. Payroll and human resources data can be used as a powerful recruitment tool allowing segmentation on pay, gender, age, position and location, allowing businesses to account for employee satisfaction and turnover ratios.
“If you control the data, you control of human resources and if you control human resources, you control the future,” states the CEO of Zalaris.
In the coming years, digital and data-led solutions will drive further change. Expect more mobile, web and 5G-led payroll experiences. Then there is the use of mobile phones as digital capture devices. Increasingly Zalaris can utilise forms and letters photographed with a mobile device, say for sick leave and doctor’s visits. The digitalisation of personal, paper-based forms will increasingly happen at pace.
“In the future, no business should be doing payroll or transactions in house. That way HR can focus on the real value-added activities, ensuring they’re recruiting, retaining and training employees. This is where human resource personnel need to focus their time and energy,” concludes Mellerud.
“Leave the rest to Zalaris, we are the fifth utility.”