Why Shared Service Centre and Business Process Outsourcing is the right model for global payroll?
Remote work, previously regarded as a perk, is now a prerequisite in the employment landscape. Most companies have employees working part of the week in the office and the remainder at home, while others have a permanently remote workforce. This development has established a distributed work model for organisations.
Coupled with the current economic uncertainty, the distributed work model poses a myriad of challenges to HR leaders. These range from nurturing collaboration, building corporate culture, recognising and developing talent, to identifying cost-saving opportunities by implementing global process optimisation in functions such as payroll.
While overcoming most of these challenges requires continually evolving skill sets, achieving cost savings through global payroll transformation is possible – with the right model.
Why multinationals need global payroll
A truly global payroll does more than pay employees in a secure, timely and efficient manner. It helps companies to unlock the power of payroll data through advanced analytics to deliver organisational insights and drive strategic decisions.
In ADP’s Global Payroll Survey 2022, 45% of the world’s payroll leaders say they have seen an increase in the amount of payroll data requested from senior management.
To fully leverage payroll data, the right model for global payroll is a hybrid of Shared Services Centre (SSC) and Business Process Outsourcing (BPO).
How to use SSC and BPO together
SSC and BPO are not mutually exclusive. In fact, the right model for global payroll is a combination of both. To begin, multinationals need to determine which functions should remain in-house and which should go directly to the BPO provider.
As the model for internal sharing of resources and expertise, SSC is best suited for processes that are strategically critical or unique to the business.
BPO is the choice for processes that prioritise cost reduction and efficiency, allowing companies to move quickly and capitalise on the specialised knowledge, experience and expertise of the BPO provider.
Aside from concise definitions, companies will do well to gain a deeper understanding of SSC and BPO to arrive at the right combination of the two.
Shared Services Centre
SSCs provide specific operational tasks to divisions or subsidiaries within the same organisation from a shared, internal resource. A cost-effective way of working, SSCs eliminate the need for every subsidiary to have an in-house department to carry out these tasks.
Previously, SSCs were primarily driven by cost reduction but new technology is elevating this underlying goal. With Machine Learning, Artificial Intelligence (AI) and Robotic Process Automation replacing much of the rote work, SSCs are moving up the value chain and providing more strategic functions such as reporting and forecasting.
Business Process Outsourcing
BPO is the contracting of a core business function such as payroll to a third-party service provider. A trusted BPO provider optimises and transforms payroll processes to be more data-driven, AI-powered and cloud-enabled. This helps businesses to work smarter, scale faster, be more productive and eradicate costs across the enterprise.
The key to getting BPO right is consolidation to eliminate the inefficiencies and risks of running disparate payroll platforms across different regions – a significant payroll weakness in multinationals. In fact, 45% of payroll leaders say their payroll staff are inundated with more queries than pre-2020, as reported in The potential of payroll: Global payroll survey 2022.
A good BPO solution provides managed payroll services across multiple countries through a single, unified and easy-to-use platform with extensive and flexible reporting.
Support and service are essential. A reliable BPO provider is geographically aligned with multinationals, ensuring the client services teams are located where and when customers need professional payroll expertise.
Unlock the power of global payroll
A hybrid of SSC and BPO, the right model for global payroll can meet the challenges of the distributed work model, integrating payroll data with other systems to deliver more efficient reporting and analytics. Only then can payroll fully deliver on its potential, providing the necessary data to drive more strategic decisions and embed greater efficiency across the business.