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Intuit Acquires Acrede to Expand Into Global Payroll Services

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Last week, U.S.-based Intuit acquired U.K.-based Acrede to expand into global payroll services. Terms of the acquisition were not provided except that closing is expected by Q1 2015.

Inuit provides business and financial services, including accounting services to small and mid-size U.S. companies. Prior to the acquisition Intuit provided payroll solely to the U.S., and it will now be able to provide payroll to its U.S. clients with international employees.

Acrede’s cloud-based technology processes payroll for employees in 30 countries, including in Europe and Asia. Acrede has offices in Jersey, U.K. and Singapore. All 80 Acrede employees are transferring to Intuit and Acrede’s CEO Karen Paterson will become Intuit's Payroll Platform Director. Prior to Acrede, Karen was the founder of Patersons, now CloudPay, which achieved success with its SaaS-based multi-country platform.

Though Inuit payroll is a sizeable business (for fiscal year 2014 Inuit’s online payroll revenue was $144m, with 345 subscribers and its desktop payroll services $506m with 1,017 customers), payroll BPO has been a small percentage of its payroll business which has historically focused on its core market of small businesses with 1 - 20 employees. However, given the size of Intuit with ~8,500 employees and ~$4.5bn revenue and Acrede’s global capability, larger companies will likely be targeted.

Acrede presents Inuit with significant growth opportunity in its payroll business. Per NelsonHall's Q2 2014 HRO confidence index, 75% of all HRO contracts were platform-based and ~one third of HRO contracts signed were for services in multiple countries, with the highest number being for payroll and RPO service lines.

Per NelsonHall market analysis, demand for multi-country payroll is one of the top drivers to outsource payroll. A key feature of these contracts is clients looking for consistent multi-country payroll processes and a common view of payroll data across geographies, integrated with their wider HR systems to provide common employee and management information. Vendor selection criteria include the provider having an international footprint in the geographies where the client has operations, the ability to scale, and multi-lingual employee support. In addition, clients desire a single contract with one vendor and one set of SLAs.

In terms of revenue, in 2013, multi-country contracts signings represented ~12% of the market. In Q1 2015 NelsonHall will be conducting its fifth global payroll market analysis, which will include the size and growth of the payroll outsourcing market for single-country, multi-country within a single region, multi-region and global (which includes three or more regions).

Per NelsonHall’s 2014 payroll market analysis, half of all vendors are currently providing multi-country payroll, with a few focused solely on multi-country. Providers are continuing to enhance their multi-country capability and with Acrede, Inuit becomes the latest example to have global payroll capability.

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