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Booming Global Payroll Market Driven by Multi-Country Contracts

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In NelsonHall’s recently published Payroll Services market analysis report, the payroll outsourcing market is forecast to grow from $17.4 bn in 2016 to $21.8 bn by 2020. Growth is across all regions, with the greatest growth coming from multi-country payroll contracts. The multi-country payroll market is growing at three times the rate of the overall market and represents ~15% of total standalone payroll services revenues.

Analysis of multi-country payroll contracts also finds that:

  • Global contracts consisting of more than two regions represent 15% of multi-country contract revenues
  • Multi-region contracts consisting of two regions represent 50% of multi-country contract revenues
  • Multi-country contracts consisting of more than one country within a region represent 35% of multi-country contract revenues.

Multi-country growth is primarily driven by:

  • Process efficiency to support increased productivity
  • Demand for consolidation of payroll suppliers
  • Greater visibility of the global workforce and associated analytics
  • Increased control over compliance and risk associated with payroll processing
  • Demand for a more comprehensive global technology solution.

Approximately 75% of vendors included in NelsonHall’s market analysis are currently providing multi-country payroll, and continue to invest in this space. The average number of countries serviced is 14, and the average number of client employees being serviced is 7,000. Contracts signed in 2015/16 for multi-country payroll services included organizations with as few as 100 employees and as many as 50k client employees.

What can we expect in the future? NelsonHall predicts that multi-country payroll will grow at four times the rate of single country services to 2020, with a 23% share of the overall market, as the size and scope of contracts will continue to grow. Key trends include:

  • Multi-country payroll will more often be combined with HCM. For example, in December 2016 and January 2017, Ramco announced several contracts for its global payroll, including HCM and global payroll contracts by Western International Group, Horizon Hospitality Holdings, LBC Express, Inc. based in the Philippines and Panasonic Group
  • Vendors will continue to invest heavily in their integration capabilities and middleware products, with the aim of providing a seamless approach to payroll across multiple geographies and technologies, to enhance speed and delivery of services
  • Tail country specialists, such as Neeyamo is today, are likely to emerge in the payroll space to service large global organizations with small and disparate employee populations in several countries and regions
  • Vendors will look to broaden both their in-house and payroll partnership network, to continue to increase in-country payroll service delivery capabilities to support the growing requirement for multi-country and multi-language payroll offerings. For example, in December 2016, SD Worx partnered with Ascender to expand its payroll services geographical reach into Asia Pacific and the Middle East. Prior to this, SD Worx boosted its European footprint by acquiring Ceridian U.K., Ceridian Ireland, CTB A&A, and Fidelis HR in Germany, as well as a strategic partnership with Ceridian in the US and Canada. 

 

To find out about NelsonHall’s extensive research plans for HR outsourcing services in 2017, contact Guy Saunders.

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