Research Note: Outsourcing Global Payroll: The Impact on Data Security & Compliance

Immedis Global Payroll Research Note ThumbnailPayroll is a mission-critical activity. Personal fulfillment and career advancement are important, but for most people the main reason they go to work is for a paycheck. Get it wrong, and the ramifications can be swift and bruising. Nearly half (49 percent) of the workforce is willing to tolerate just two problems with their paycheck before beginning a new job search, according to The Workforce Institute at UKG. This is probably because 69 percent of individuals would experience financial difficulty if their paychecks were delayed for a week, according to results from a 2020 survey conducted by the American Payroll Association. It’s a phenomenon other data corroborate. Nearly four-fifths (78 percent) of the workforce lives paycheck-to-paycheck to make ends meet, according to CareerBuilder, whose findings show these struggles are apt to affect employees who earn more than $100,000 annually, not just entry-level or low-wage workers.

What You Need to Know
Consider the pent-up employee sentiment waiting to be validated or triggered against the backdrop of the massive complexity global organizations face in processing payroll in a timely manner, accurately, compliantly, and securely every pay period. Payroll teams, HR and finance face a daunting task managing highly sensitive employee data as efficiently as possible to deliver timely and accurate payroll. Because technological infrastructure is critical to paying employees, the organization’s CIO is also an important stakeholder who shares responsibility for ensuring that global payroll processes successfully every time.

How an Organization Evolves into Needing a Global Payroll Solution
The road to global payroll is long and winding and often unpredictable. Put differently, a solution for global payroll is not something employers typically implement before it’s needed. This type of action is not even something they really can do. Unlike a software vendor’s modules for human capital management, for example, global payroll isn’t a pure-play off-the-shelf functionality any given employer is apt to pay for up front, but leave shut off until the time is right. Never mind that an outsourced solution for global payroll constitutes far more than software. Whereas the need for a level of capability around performance management or any other conventional silo of HCM proper or its subsets always exists, this is not so with global payroll. It is one of those needs that does not exist right up to the point when it undeniably does.
It is at this point that the vast majority of organizations will contend with their need to process payroll on a global scale however they can. Every pay period—weekly, every two weeks, or, for some, monthly—many continue on, for far too long, rolling the rock of a heavy manual payroll management process up the same hill again and again. With heavily manual workflow for global payroll, employers waste unnecessary labor expenditure on exceptionally tedious tasks. Compounding matters, these organizations also run a high risk of missing the deadline for payroll and paying staff inaccurately, all leading to yet more labor expenditure to rectify the situation and remain compliant with myriad regulatory environments.

This research was sponsored by Immedis.

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