Whether you are an established company looking to streamline your HR operations, or a company that is currently expanding into a new market, issues relating to payroll are more than likely something you have already faced or will face soon.
Alongside global trends that can bring new and unexpected employer obligations, global payroll requires expertise in numerous local regulatory systems to ensure compliance. Outsourcing these payroll operations can save you time and money and keep you working safely.
What is International Payroll Outsourcing?
Payroll Outsourcing is the act of partnering with a third-party company to take charge of many or all of the operations relating to payroll processes. This could be undertaken domestically or internationally to expand your business into a new foreign market.
It’s important to note that in this case, a Payroll Outsourcing Service Provider does not act as an Employer of Record (EOR) or Professional Employer Organization (PEO). Instead, it simply manages administrative and compliance processes related to payroll.
How does Payroll Outsourcing Work?
When thinking about payroll outsourcing, you need to consider whether it is suitable for you and your company. There are many reasons to outsource your payroll operations, from being unsure about the local regulations in a new market to wanting to downsize and streamline your company structure. This kind of service may not be suitable for all company types. However, as we will see, there are various options available that could bring massive benefits to you and your company.
Many companies have requirements that a good payroll outsourcing provider can meet. Once you understand your needs, you can find the right professional provider to match them.
There are many payroll services you can outsource and many outsourcing services providers that will offer a list of potential options. These providers will propose many or all of these services, but it’s essential to take the time and consider your options by meeting these companies to find the right fit.
A good services provider will have a strong history of client satisfaction, so it will be essential to understand the history and culture of the company before you make an agreement.
Does the services provider have expertise in the market you are targeting? Do they have the right knowledge and expertise to handle global payroll services? Do they have good local resources and support structures?
By learning more about potential partners, you can understand their reputation and how they can benefit your company through their services.
When searching for the right services provider, you will also need to remember potential disadvantages of outsourcing your payroll operations and keep these in mind as you make your choice.
You will need to ask:
Does the services provider give absolute security assurance?
Outsourcing your payroll operations will necessitate handing over potentially secure material. You should check that the provider has a good history of platform security and that your payroll processes will be open and transparent to you at all times.
Does the services provider ensure good levels of communication?
While you may be considering outsourcing your payroll operations to cut down on time and effort, you need to find a provider that will be available to answer your questions and give you support and guidance at any time.
A provider that’s too large may make you feel like you’re just one of a countless number of clients, while something too small may quickly become overworked and leave you feeling ignored. Ensure that your services provider can provide you with the communication and attention you need to feel secure.
Is the services provider lacking experience or knowledge?
It’s important to know that your services provider has the proper knowledge and networks in the markets that you are targeting. Newer companies can lack critical competencies, so it’s crucial to find out about their way of working. This way, you can ensure that they fit your requirements and your company culture.
When you are sure you have the right company, you can draw up a service agreement to include as many payroll outsourcing services as you want. This is adaptable to the level of control you wish to maintain. If you wish to be very hands-on, or if you’re more comfortable allowing a services provider the scope needed to manage the operations for you and keep you up-to-date as you see fit, these terms can be outlined in the services agreement.
Some payroll outsourcing services providers may also offer a range of other HR services. These can really help you and your company, so it may be helpful to ask what other benefits they can provide.
How Can Outsourcing Payroll Help Your Company?
Even with the problems associated with the lingering effects of the pandemic and an uncertain future, international expansion plays a significant part in how companies see their next moves. The vast majority of U.S. companies, for example, still consider global development as their goal, and this is only set to increase as the effects of the pandemic become less apparent. In the near future, it’s expected that companies will look to expand into a wider variety of countries, meaning it’s more important than ever to consider the complexities of hiring and paying your staff in foreign countries.
The legislation around tax and other financial obligations is constantly changing. Global trends can always lead to regulatory changes even in countries and regions where tax laws are relatively stable or positive towards business. When new changes occur, likely, it will be up to you as the employer to be aware of and adapt to them.
An excellent example of this is the recent addition of a Mental Health and Wellness Surcharge applied alongside payroll taxes in Victoria, Australia. This change follows similar surcharges and debated introductions in countries around the world. These surcharges are typically the responsibility of the employer to know and apply, and failure to do so can lead to severe problems for both established companies and newly expanded entities.
What Problems does Global Payroll Outsourcing Resolve?
Many markets that are otherwise the most opportunity-laden for a company are unfortunately the most complex regarding local regulations related to payroll. Issues of language, bureaucracy, or global relations may cause undue complications for companies looking to make the most of them.
To look at one example, Chinese payroll regulations include many requirements relating to social security and insurance contributions. While China remains a strong beacon for international companies, the complexities around its labor laws can be fatal for a business that goes in unprepared.
So it’s vital to have the proper knowledge when it comes to dealing with these issues. is likely going to be too much of a problem when you’re already attempting to expand into a new market, so partnering with a professional payrolling outsourcing provider is a fantastic way to make the most of local expertise without increasing the size of your own HR department.
The potential problems associated with payroll are many. Still, payroll outsourcing providers are here to provide you with the answers. Below, we’ve gathered together some of the biggest problems a company can face when establishing payroll in a foreign market and what solutions an outsourcing services provider can offer.
Problem: Time-consuming payroll processes
Solution: The time spent organizing payroll quickly adds up, and it scales with the size of your company. A payroll outsourcing services provider can provide you with a single point of contact that you can check in on as often as you feel necessary. Outsourcing your payroll means freeing up all of the time spent on organizing it in-house and permitting your team to focus on other tasks that will better benefit your company’s growth.
Problem: Costs Associated with payroll compliance
Solution: From first finding and hiring the right people with the right skills to handle your payroll internally to the costs of making mistakes or missing new changes to local regulations, payroll can quickly snowball into a serious regular expense. Outsourcing your payroll allows you to minimize your company structure, fold all of your payments into one monthly fee, and have the best compliance assurance possible. A good services provider will also have the know-how needed to make the most of local laws to save you money on unnecessary payments.
Problem: Complex global payrolling processes
Solution: It can be hard to understand the variety of payroll regulations that exist around the world. Unless you are looking to hire new team members with a background of expertise in every market you want to operate in, why not outsource your payroll needs to a services provider with years of experience in dozens of local markets? Time and money that would go into understanding the minutia of a new regulatory system could be better spent ensuring you’re entering these markets with everyone in your team focused on what counts.
Problem: The Potential for error
Solution: Payroll mistakes can be costly at the best of times, but if they happen in another country or come at a time when you are just branching out into a new market, it can cause massive problems and delays. Language barriers, unclear regulations, hidden fees, even issues related to cultural differences, all of these things can cause you to slip up right at the wrong time. By outsourcing your payroll needs to a services provider, you can enjoy a higher level of legal assurance with the best industry tools and knowledge.
Which Payroll Functions Can be Outsourced?
Payroll functions are tedious and repetitive at best. Still, they consume a lot of time for something required every pay period.
There are many operations that a services provider can manage for you, such as:
- Payroll calculation
- Payroll tax filing
- Payroll and custom reporting
- Compliance assurance
- Onboarding compliance relating to payroll
- Employee payment options
- Year-end processing
How much of your payroll needs you decide to outsource will depend on many factors. Hence, it’s essential to consider the scale of your partnership with a services provider when looking for the right company.
How can INS Global help you?
INS Global has 15+ years of experience providing outsourcing services in 80+ countries. We have teams of specialists who can offer expert support in many areas of HR services.
Our payroll outsourcing team can provide you with all the specialist local knowledge needed to assure compliance and maximize your payrolling efficiency in the global market. Furthermore, if you want to expand to a new market, why not consider the fuller list of services that INS Global can provide? Make your expansion quicker and easier through PEO and EOR services, recruitment, or company incorporation guidance.
Contact our team here today to find out more about our services.