Through many years of delivering global payroll technology and services, Acrede’s team have a very thorough understanding of the global payroll industry and the models provided by ‘global’ payroll providers. Indeed, Karen Paterson, Acrede’s founder and CEO, was instrumental in identifying and implementing the first solutions for multinational organisations who were looking for a business model to address the challenges of managing and paying their global workforce.
Back in 2000, with the uptake of the internet into global HR and payroll, technology at the time afforded single contract providers the ability to offer technology solutions that facilitated the transfer of electronic information through workflow. This enabled payroll information to be exchanged in a relatively secure way between clients, aggregators, and in-country payroll providers. This was the foundation of the aggregator model.
Simply put, the aggregator model enables a single global provider (aggregator) to offer a single contract solution to a multinational organisation. The aggregator then contracts with either regional or country specific independent payroll providers – or a combination of the two. The aggregator clearly needs to offer a technology solution to facilitate this model. The minimum technology solution, as above, provides the functionality required to allow documentation to be exchanged between parties.
The benefits for an organisation looking for an outsourced global payroll solution include the simplification of contracting to remove the need to manage many country specific providers. Instead, the aggregator becomes responsible for sub-contracting their own partners to deliver payroll on the client’s behalf.
No investment in technology
Issues for both clients and providers within the aggregator model come in many forms. Firstly, in many cases aggregators are simply supporting the exchange of documents. Clients clearly need to provide information to the providers that are processing their payroll, so aggregators provide the technology to support this process. This is indeed the minimum that a client should expect. This rudimentary technology solution is not however sophisticated enough to deal with the fundamental issues that exist within the aggregator business model.
Inconsistent data formats
As clients and providers are often using different systems, the format of data that they exchange, through the aggregator is frequently different. Added to this, all of the country providers are using different systems so there is also the challenge of inconsistency of data across countries.
Essentially, the format of the data is not in a structure that the aggregator, and ultimately in country providers, need. This means that data is amended manually to meet the specific requirements of the aggregator and provider. Not only does this break compliance, it also introduces significant risk into the business model and, of course, cost – someone has to pay the price of manual intervention and error.
Inability to provide customisation
Due to the lack of technology being used to support the global payroll process, solutions to provide client specific requirements are also costly and time-consuming – if indeed possible at all.. For example, where a standard General Ledger output is needed by a client, which is certainly not uncommon, if the aggregator is not mastering global payroll data, they find is extremely difficult (and cost ineffective) to create a consistent, accurate and compliant output for a client.
Limited interface options
The ability to deal with outputs from an ERP system automatically is a standard requirement for many multinational organisations. The only option available is often manual extraction, transformation and loading – or even to build costly bespoke solutions.
Difficult and/or non-existent global reporting information
With many different formats of data being used by each country provider, the consolidation of this information into a single common structure for global reporting is extremely complex and therefore not usually provided, or it is misleading due to data errors. For example, if an element such as gross pay isn’t standardised across all data feeds from country providers, information will be fundamentally wrong when reported at a global level.
It is all very well providing elegantly presented reports but if the underlying information is wrong, the reports are worthless and even worse, potentially dangerous to a business’ decision-making.
Unable to provide a consistent experience for all employees
The lack of a centralised global HR and payroll solution also often limits an aggregator’s ability to provide global functionality to help multi-nationals provide a consistent user experience for its employees. For example, with individual providers producing payslips without a centralised production and distribution solution in place, employees in each country are likely to receive different formats of payslips, delivered in different ways.
Employee and manager self-service is also a critical component for multi-nationals looking to provide a consistent experience for all employees. Again, aggregators typically do not see self-service as a component that they need to invest in for their clients.
Price is driven by the individual country market
Aggregators are clearly reliant on in-country providers to deliver payroll services. However, In-country partners often, quite rightly, treat the business from aggregators as country specific – indeed it usually is for them. Therefore the price that they charge aggregators is no different to the price for the man-in-the-street. The in-country provider is also pricing the services they deliver based on the country market rate.
Aggregators obviously need to make a profit, but to deal with the complexity of data exchange, providing compliance and timely payroll delivery, aggregators need to add a significant margin to partner market rate prices. In-country providers have no incentives to provide a lower price to aggregators – they receive the data in a format that isn’t in-line with their requirements, they have to deal with all queries from the client, as well as having to educate the aggregators in their country payroll when the need arises.
You have to question the value that the aggregator is providing
Without any obvious added value from the aggregator, clients understandably question the benefit of the ‘single-contract and nothing else’ approach. Some aggregators levy a margin of 40% which is a huge cost for clients just to have someone else managing contracts for them!
Fundamentally, aggregators are not providing multi-nationals with any added value to enable then to reap the benefits of outsourcing their global payroll.
There is now an alternative
Acrede identified that the aggregator model was broken years ago and believed then in providing clients with an alternative model that addressed these issues.
The Acrede approach provides organisations with technology and services that enable them to effectively deal with the challenges of global workforce management and payroll delivery. Acrede’s true Cloud technology removes the challenges that global organisations face by centralising global workforce management, payroll processing and full payroll reporting.
Unlike other providers, Acrede offers its clients complete access to the Acrede product suite therefore centralising all payroll processing into one global database. Whilst Acrede will manage the payroll function, clients are able to manage their HR data using the Acrede Touch application. Where clients elect to send us data rather than using the application, this information is managed through Touch Point – in either automated or manual modes.
Acrede’s solution brings compliance, control and visibility to its clients’ single, regional and global payrolls. Seamless, end-to-end, automated workflows, incorporating best BPM practice and a fully controlled and compliant approval process ensure guaranteed compliance.
Acrede’s full range of services can be accessed via any hardware or mobile application, including tablets and smartphones, as well as being browser neutral. Wherever there is an Internet connection, our solution is just a click away. This means that clients can access their global workforce and payroll data at any time and from any global location. As this is a true Cloud solution, all information is available in real-time.
The benefits of Acrede’s solution are truly magnified when moving from single to multiple countries – where the global aggregation of data gives full insight and clarity across a client’s global workforce in real-time. Full payroll and tax-filing services can be delivered to over 170 countries, for any number of employees.
An important benefit of Acrede’s solution over others’ is scalability. Our systems architecture, which includes Cloud virtualisation, guarantees we can scale up or down to any required system capacity at a moment’s notice. This pay-as-you-go feature gives our clients optimal flexibility to follow acquisition or divestiture strategies with absolute confidence in their payroll provider’s support and stability.
Acrede’s Touch application also provides access to Employee and Manager Self Services, so that all transactional HR can be automated. Such functionality frees up valuable HR resource, and brings efficiency and cost savings to our clients’ businesses. Employees use Touch Point to access their electronic payslips, any other documentation that is specific to them, as well as any general company documentation that has been distributed. This ensures the same user experience for all.