service provider to be the “all- knowing” expert on all aspects of payroll in all countries, but this is unrealistic. No single outsourced payroll service provider has deep knowledge and expertise in every country. Having numerous service providers, however, can result in an inconsistent service experience, where some providers are good while others are subpar. If the employer outsources non-U.S. payrolls to a payroll aggregator, the service provider may not have internal staff or offices in each country needed for the service contract. To remedy this, aggregators often subcontract to other local service providers (LSPs), or in-country providers (ICPs). Although the service contract has a single point-of-contact for the company, the payroll aggregator must work with each local service provider to send and receive information, answer questions or resolve issues. Your employees may not have direct access to the local service providers. Technology platform providers that follow a hybrid model require separate contracts
with local service providers in each country as well as a main contract. Costs and Expectations By its nature, global payroll outsourcing is more costly than U.S. payroll outsourcing. In certain situations, the employer may need to separately engage intermediary service providers to “bridge” the processes between the company’s current payroll functions and the local or overseas payroll administrator’s processes. Engaging an Employer of Record (EOR) firm can be beneficial, but, in general, employers should note that costs can rise dramatically with this outsourcing option when administering large employee populations. Delays with communications across different time zones add to the challenges of administering a global pay in general. There will be a need to incorporate additional time for responses to questions and other communications to account for time zone differences (i.e., at least 1-3 business days).
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ISSUE 8 GLOBAL PAYROLL MAGAZINE
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