Key Findings & Highlights:

Today’s payroll services have the capability for real-time processing, faster cycle times, and error-free and integrated experiences with flexible payments, where users are aided by GenAI- embedded conversational tools.

The payroll services market is broadly driven by buyer needs to achieve improved accuracy and compliance, primarily removing risk of manual errors as well as helping to navigate changing legislation through improved anomaly detection.

Organizations looking to transform payroll are driven by the need to digitalize, consolidate and scale services across their enterprise, often beyond a single country, to bring efficiency gains and improved experiences, as well as supporting agility, resiliency and business change.

The multi-country payroll market continues to outgrow domestic payroll markets by ~2.5x. Growth is driven by net new multi-country buyers and underpinned by the expanding needs of existing buyers. The majority of vendors offering multi-country services continue to invest in in-house direct delivery once they have scale, rather than relying on local partners.

Over the last 12 months, notable vendor acquisition/divestiture activity includes:

• SD Worx has continued its European expansion strategy, adding Polish and Romanian payroll software and service providers to its portfolio
• In July 2023, the merger between Vistra and Tricor Group (Tricor) was completed
• The Payroll & Professional Services business of Alight was divested and now has a refreshed focus on multi-country payroll as a core business, rebranded as Strada
• Deel acquired Payspace.

Vendors are investing in major technology upgrades and replatforming projects to better support advanced insights, analytics, integrations and faster processing.  Vendors’ global payroll delivery is expected to radically change as GenAI use cases continue to be applied to the process and as the market matures and consolidates to better support multi-country needs.

Looking ahead, NelsonHall expects the payroll function will become a more dynamic and more “front-of-house” function, with customer and employee feedback sentiment and surveys being increasingly used as key metrics to evaluate the service. Payroll service integrations into HR platforms will become deeper and the service will be evaluated on more sophisticated criteria (e.g. first-time resolution) than just metrics that relate to payroll accuracy and timeliness, although these will remain core.