Payroll Leaders Viewpoint: Navigating the Subcontracting Model

The use of subcontractors for payroll services delivery (either in the form of processing or compliance advisory arms) is prevalent across all leading payroll outsourcing providers. Many use them even when the underlying payroll technology platforms used do cover country-specific payroll processing needs for every country where employees are based. This is because the vendor and customer need both – a local payroll processing engine and local compliance expertise.

One common theme expressed by payroll customers we interviewed, one that also related to working with the “federation of vendors” model, was the need to have a global view across disparate operations – and often disparate technology platforms. Most of the leading global payroll suppliers offer this in the form of a hub or dashboard, but it’s not the availability of such a cross-regional hub that causes angst for customers. Instead it’s whether or not the data has been totally verified at the source and extracted and consolidated correctly. The good news is that data verification and reconciliation, particularly impacted by exception processing (check voids, retro or pro-rated payments, etc.) are now universally viewed across the customers we spoke with as prime candidates for cognitive computing and AI in the payroll domain. Roughly a quarter of the payroll vendors included in our current study are pilot testing such capabilities, and the results have been promising.