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Companies Rely on Outdated Network of Local Payroll Vendors

Payroll has not kept pace with today’s globalized work landscape. Today, many organizations tackle global payroll locally, dealing with overwhelming regional compliance requirements and unreliable payroll vendor support. This results in a complex and costly payroll ecosystem with inaccuracies, slower operational agility, and ultimately, frustrated employees.  

Deel commissioned a study with Forrester Consulting to delve into the pain points that more than 300 payroll decision makers face and what it would take to address their issues.  

As the world of work becomes more distributed, relying on a network of local payroll vendors isn’t sufficient anymore. Three-quarters (75%) of respondents say that payroll complexity is driven by a perceived need to use a network of different payroll vendors for each region and country. On average, respondents’ organizations use six payroll tools, and 86% of payroll leaders note that payroll is managed through a hybrid approach—with some managed internally and other managed externally by payroll vendors.  

This means that there are too many vendors and resources dedicated to making payroll work. As a result, organizations are focusing the most on prioritizing streamlining workflows across these systems (63%), reducing errors (56%), improving payroll vendor support (54%), and consolidating the network of payroll vendors (49%) in the next 12 months.  

The study finds that 85% of payroll leaders anticipate that their payroll costs on a per-employee basis will increase in the next year. Most organizations aren’t realizing the full picture of total global payroll costs, many of which stem from an overly complex ecosystem with disparate systems in place per region.  

On top of that, many have experienced unexpected or hidden costs following implementation of their payroll system on ongoing maintenance and support costs (47%), compliance costs (45%), data management (45%), and support costs (45%).  

When asked about their top challenges, payroll leaders find that maintaining a consistent employee experience across geographies, inefficiencies from maintaining multiple systems, and adherence to regional compliance requirements are among the most challenging. Others include payroll errors (48%), delayed payments (41%), issues with talent attraction and retention (40%), limited ability to analyze employee data (42%), and compliance issues (40%).  

In fact, slow payroll vendor support and unmet service-level agreements (SLAs) have far-reaching consequences felt throughout the entire organization including delayed payment to employees, inaccurate calculation of wages, and loss of productivity. 

An overwhelming 97% of those surveyed said an all-in-one payroll solution would be extremely valuable. Nearly all payroll leaders agree that one common global payroll platform, with one view of a company’s workforce and systems, alleviates many of these challenges and enables their organizations to hire and maintain employees worldwide more easily. 

A further 86% anticipated a positive impact to their organization’s ability to adhere to regional compliance requirements, a task that payroll leaders continually noted utilized significant cost, time, and effort from their team. Moving away from overly complex systems to just one solution also leads to process improvements (88%) and lower payroll administrative costs (85%). 

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