Doing business in Europe, especially on an international scale, requires new thinking and more sophisticated solutions when it comes to payroll and HR. A key reason pertains to variables from country to country – in conjunction with regional trends, expectations and legislative demands. Besides obvious differences like on the language front, the European market requires an especially deft and unique touch in every respect, from payroll to HCM.
Let’s examine the distinctions from other parts of the world. In the U.S., for example, privacy stipulations are largely dependent on individual – and increasingly stringent – state-by-state regulations. Don’t mistake this to mean that more European-region-wide developments like GDPR won’t filter over to the U.S. In fact, the European Union General Data Protection Regulation (GDPR) effectively imposed its sanctions power beyond companies in the EU.
Any enterprise not based in EU countries yet doing business in the region must still abide by and adhere to GDPR measures – or face harsh penalties. It won’t be surprising if similar conditions eventually evolve on a global scale. Right now, inconsistency is real.
In the Asia Pacific, Japan’s Act on the Protection of Personal Information (APPI) emerged as one of the first privacy laws in the region. In 2017, Japan strengthened — through amendment — tougher data privacy controls. China’s Internet Security Law is seen as a means in recent years to increase both cyber security and national security in the country, affecting network operators and enterprises in every major industry. Organizations are expected to “safeguard network operations” to, among other things, help prevent and ensure reporting of data breaches, with more punishments to enforce. In 2018, state agencies received legal authority to handle network security inspections.
The global developments that are shaping HR/HCM/payroll trends contrast sharply when examined on more regional and local levels.
Most companies obviously want to innovate, grow and transform their operations in the digital era. In Europe, however, the challenges can be particularly daunting and difficult to address. In this context, outsourcing is among the smartest and safest bets across the region. It’s among the reasons that Everest Group, one of the best in tracking related market trends, forecast a 6-8 percent annual growth rate for multi-process human resources outsourcing (MPHRO) over the next three years – reaching an estimated $5 billion market size this year.
What makes Europe unique on the payroll and HR front? A lot. Here are several examples to keep in mind as you weigh the pros and cons of inhouse operations vs outsourcing.
Workforce transformation, changing expectations
The number of “gig workers” doubled in the European Union from 2000-2014, according to Morgan Stanley, which deemed them the fastest-growing category in a recent report. PwC projects that external contractors will account for 20% of the total number of workers, with the global gig economy topping USD2.7 trillion by 2025. Are you able to effectively adapt systems, processes and policies as such dynamics and shifts occur? Is your payroll system ready for the influx of temporary workers?
Cross-border proficiency, secure master data
International operations in Europe and across the world need to move away from less-than-ideal disparate systems. By centrally managing HR master data, including the collection of critical information and workflows (such as employee status changes), analysis can be conducted with greater certainty and more on-target outcomes. Time and expense management are all part of this increasingly mobile equation.
Cloud-based payroll and HCM scalability
With payroll and HCM solutions quickly rising in the cloud, you likely have more to learn than to contribute compared to a qualified partner like Zalaris. Knowing what it takes to properly plan, deploy and optimize cloud-based platforms, systems and apps in Europe depends on in-depth experience. The more you take on in-house, the more risk you inherently absorb unnecessarily. We are reliable experts in HR, payroll and HCM in the cloud.
GDPR truths and consequences
Europe has emerged as a trendsetter regarding privacy protection and related matters. Severe penalties await those not in compliance. Partnering with a proven HR/payroll specialist should immediately offset GDPR concerns, including automated cloud-based payroll that’s GDPR compliant by design. BPO leaders fully understand the consequences of non-compliance, where it’s likely to arise, and how to avoid the pitfalls that can surface while helping ensure consistent GDPR adherence in all aspects of the enterprise.
Employment law and tax code compliance
In addition to staying on top of GDPR and other regional statutory conditions that pan-European companies encounter, established partners like Zalaris already have local-language-based offices and expertise to meet increased legal obligations down to individual country levels. You can reasonably assume such requirements will become increasingly complex and more stringent over time – and keeping up with them even more arduous. Consider all the tax codes that also must be met by country, and you can again see why partnerships deserve the nod.
Pay transparency, gender gap clarity
Reporting on these fronts has risen to new levels of importance in Europe. Openness about pay structure, fairness and equality certainly makes good business sense. The growing effort across the region to combat discrimination through policy, measurement and legislation also mandates action. By working with a BPO partner who stays on top of the issues and what steps to take when, you gain a leg up amidst the changing expectations and a clear path to transparency.
Companies in Europe face somewhat disproportionate HR and payroll challenges compared to many other parts of the world. And it’s relatively easy to be consumed by all the administrative burdens, system realities and technical complications. Mistakes are common for those lacking the skills, knowledge and capability for informed decisions. Innovation that supports growth and transforms outdated environments must be handled proficiently given how much is at stake today.
Agile enterprises, that attract and develop the best talent realize the benefits of not straying much beyond their core competencies. They typically aren’t focusing their development investments and focus to internally create what Zalaris has continuously evolved over the past 20 years in HR, payroll and human capital management. Related best practices and continuous improvement are inherent in what we do, centered directly on keeping customers perpetually prepared for their HCM/payroll future. BPO can often serve as the catalyst or long-term solution.
What’s equally or more important is when a partner can deliver both project and BPO value specific to the unique market characteristics of European businesses. We deliver on both local and pan-European levels – and are ready to help you “value people” to the greatest extent possible while unleashing deeper organizational value in every conceivable way…including the “European way.”
Sami Seikkula is the Executive Vice President of Northern Europe at Zalaris. Prior to joining Zalaris in 2018, he had been ramping up businesses within software sales, finance, accounting & payroll outsourcing services. Sami also gained M&A experience from heading acquisition processes and integration projects in Norway, Germany, the Baltics and Poland. He holds an MSc in Engineering with a major in Industrial Engineering and Management from the Technical University of Tampere.