Enabling Technology

Top Payroll Deals of 2005

A broader adoption of multi-tower deals means payroll is often rolled up in full-service outsourcing agreements.

by Andy Teng

Outsourcing payroll just isn’t what it used to be. Although industry estimates indicate that fewer than 50 percent of all companies outsource payroll (the universe includes millions of small businesses), the number of standalone payroll deals aren’t growing nearly as quickly as the number of multi-tower outsourcing deals. That’s because while many companies still outsource just the payroll portion of their HR services, record numbers of buyers are outsourcing end-to-end services including payroll.

This was echoed by a number of enterprise HRO providers contacted by HRO Today. They say that some of their largest deals in payroll now also involve services such as benefits administration, compensation planning, incentives, training and development, recruitment, and others. This reflects the general market trend of wider, broad-scope HRO adoption.

That aside, some providers say they also have moved away from offering payroll- only services and encouraged clients to expand their outsourcing activities. This makes sense for a number of companies, especially if, for example, they lack an integrated time and attendance system tied into payroll processing. After all, realigning the processes is what HRO is all about, and buyers certainly get more from an integrated approach than piecemeal buy-in.  

That’s good for multi-tower HRO providers because it gives them the opportunity to sell value-added services and to move away from competing on price alone. Payroll is pretty transactional stuff and doesn’t fetch a lot of value for the provider, but payroll, and all the other services that could potentially be bundled with it, is a different story. Adding self-service, defined benefits, access to an HRMS, and other offerings in the mix will be good for both the buyers and providers.

One casualty of this transition to multi-tower HRO is that many vendors contacted by HRO Today for this listing have decided not to discuss their payroll deals because they fear it would hurt their efforts to recast themselves as full-service providers or that clients asked not to discuss their outsourcing activities, especially those with overseas implication. Although our mission is to encourage the open discussion of HRO, and having made great strides in this effort in recent years, we respect some segments of the industry wanting to remain tight-lipped about outsourcing.

In looking at the biggest payroll deals, we used one central yardstick to gauge deal sizes: number of employees serviced. Some lower-ranked contracts have a much larger overall value, but they include many other towers. Comparing the number of employees gives us perhaps the most even-footed look at just the payroll portion.

In most cases, the numbers cited here were provided by the vendors. Information from others was garnered from press releases and other public sources. Deals submitted by providers without the client name were not included because they couldn’t be independently verified.

We hope this year’s look at top payroll deals is helpful to you and offers up a unique perspective on market practices in payroll. As always, we encourage you to contact HRO Today if we have omitted your most important deals or if you have any other comments.

Click here for the Top Payroll Deals of 2005.  

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