This past week I had the opportunity to attend a private event hosted by Safeguard Global at Crewe Hall in the U.K., where the company celebrated its continued success in the global payroll space and made a major announcement that aims to fuel the company’s continued growth and support its vision for enabling simplified, compliant global expansion for multinational businesses.  

Safeguard announced it has secured funding from private equity partners Accel-KKR (AKKR) which invests and manages a portfolio of innovative mid-market software and tech-enabled services companies. The investment is for a minority stake in Safeguard Global and will provide Safeguard with the funding and support needed to fuel investments in its platform and expanding capability to drive future growth.

With this new funding, Safeguard has acquired Workfor, a Pan-European based provider of technology-enabled human capital management services, including employer of record solutions (EOR) and managed payroll capability.  

Background to the acquisition

The two companies are no strangers to each other, having partnered since 2013, with Workfor supporting Safeguard as an in-country partner for its Global Employment Outsourcing (GEO) offering through Workfor’s EOR solution.

Workfor brings a portfolio of technology enabled HR services that is specifically designed around country domain experience for both local payroll and the employer of record model. Their regional footprint enables them to provide pay and expansion solutions, including managing registration, payment, and compliance in eight European countries where it has a local presence.

It also brings to the table a proprietary platform technology called AdminMe. The AdminMe platform is a SaaS solution capable of supporting payroll, employer of record, and time for all of the regions they support. A key capability for the platform is native gross to net payroll engine functionally for five of the eight countries it operates in, with plans to expand this to more countries in the coming 12-24 months, with France due later this year. Additionally, through the AdminMe platform, Safeguard also gains time and attendance functionality – a capability that other global employer of record providers currently lack as part of their payroll technology solutions.

Last, and possibly most impactful in the short term, Workfor brings with it valuable in-country presence, with ten offices in eight major EMEA countries: Switzerland, France, Spain, Portugal, Moldova, Greece, Italy, and Romania.

What this means for Safeguard

The investment by AKKR is a vote of confidence for Safeguard, its leadership, and the solution it has brought to market. During his speech to the Safeguard team, CEO and founder Bjorn Reynolds cited Safeguard’s legacy of innovation and disruption in the global payroll space, stating “…the next phase of Safeguard Global is going to be ambitious…”. The investment gives Safeguard the resources to double down on advancing its technology and building out its highly successful GEO capabilities and delivery model.

The AKKR investment also comes with leadership and guidance (including board representation) from a PE firm that is no stranger to the HR services and technology market, with a history of investing and owning similar firms. This brings both an outside advisory perspective on the industry, but also the potential opportunity to partner with these providers in the longer term.

While Workfor’s EOR installed client base is similar in size to Safeguard’s (with some overlap due to the partnership), the acquisition is by no means a simple ‘fold-in’ to boost client numbers or market share. The addition of Workfor’s EOR capabilities immediately compliments and expands Safeguard’s existing GEO offering to include candidate sourcing and time and attendance to provide a holistic, turnkey compliance model for enabling agile global expansion.  

The addition of AdminMe to the portfolio is possibly the big win here for Safeguard, which gains platform capability that compliments its own Unity platform, adding gross to net payroll capability in select countries, but also a strong time and attendance capability that Safeguard can now incorporate into its offering. While the platforms are currently connected, the first challenge will be fully integrating these two solutions to maximize their capability.  Safeguard also plans to build out the AdminMe capabilities through continued investments.

The expanded in-country presence and resources in several major EMEA countries is also a nice add for Safeguard.  By gaining these in-country resources, Safeguard can reduce its dependence on third-party ICPs within its payroll delivery model, increasing its control over its payroll processing in these countries, which can increase its speed of delivery, reduce its operating costs, and improve its margins as a result.

Lastly, Safeguard gains the ability to create more flexibility in its offering, and engage a wider range of buyers, by being able to engage them with point services and solutions vs. an all-in managed services arrangement. This could include standalone services, and the potential to license its platform for use by clients in-house.

Overall, I like this move by Safeguard, as I think it complements them well and creates plenty of new opportunities to grow and build on the momentum of its GEO offering. It also comes at a perfect time – NelsonHall’s recently published Next Generation Payroll Services report finds that a key trend driving global payroll outsourcing adoption is that managing payroll compliance is more complex than ever, and more commonly organizations of all sizes are being pulled in to new international markets, creating significant risk if not executed properly and within compliance. The ability to tap into a turnkey HR solution for global expansion is very compelling when you consider the alternatives.

Safeguard has enjoyed rapid growth and adoption for GEO to date. However, the solution and even the concept is still somewhat overlooked by uninformed buyers. While I expect this strong adoption to continue given the current state of the market and the results GEO is delivering, Safeguard could benefit from more aggressive marketing of the GEO solution to inform the market of its successes and potential.  As one of only a handful of vendors offering this capability, and solid investments to support its roadmap, Safeguard is well positioned for growth.

(For a deeper dive on Safeguard’s GEO model see: SGWI’s GEO Employment Model: Enabling Agile Global Expansion (May, 2018).