Peeriosity research shows that approximately 75% of companies are outsourcing at least a portion of their Payroll process.  With any outsourcing, the arrangement comes the need to provide the necessary company oversight for the outsourced processes, and the quality of this oversight can be a critical success factor for the outsourcing arrangement as a whole. 

During a recent Peeriosity Peercast^TM a major global technology company with over 60,000 employees shared their experiences in administering a Payroll outsourcing arrangement and how they ensured that the relationship was optimal for both sides of the agreement.  As part of the company’s Global Business Services organization, the Payroll group has successfully outsourced Payroll Tax Processing, Check and Advice Printing, and the International Payroll process (excluding ex-pats) covering 30 different payrolls in 20 countries. 

Focusing on the International Payroll process, the featured company outlined how they have set up key internal processes that help them to be best aligned with the outsourcing provider, as well as to effectively administer and monitor this key relationship.  Some of the key points made in this part of their presentation included:

Align processing hubs based on region

• EMEA, APAC, Americas
• Biweekly touch base

Track vendor performance metrics

• Accurate and timely final payroll
• Accurate and timely bank, general ledger, and tax files
• Systemic issues
• Ticket tracking

Automate monitoring of key processes

• Receipt of payroll files from the vendor
• Receipt of tax payment and filing documents from the vendor
• Confirmation of tax payments

Develop checklists for key internal processes

• New implementations
• Year-end processing

Keep in touch with HR in the business

The feature company has a global process owner for the overall Payroll process (both domestic and international), and a global process owner who is solely focused on the International Payroll process.

During the Peercast, the featured company emphasized the importance of keeping the lines of communication open with the outsourcing provider.  Besides dealing with the typical day-to-day issues facing any Payroll operation, they have set up bi-weekly calls with their account manager to discuss open issues and how to best resolve them.  In addition, they focus their attention on the following:

Work with vendor on process improvements

• Managing stated service levels
• Front/back end technical processing

Perform root cause analysis

• It’s not about the blame, but the “Why”
• Resolution agreement, short and long-term

Review of monthly metrics with the governance team

In addition, they provided Peercast^TM attendees with an in-depth overview of their vendor performance metrics package utilized in conjunction with this critical third-party relationship.

Looking at the results of the two iPolling^TM questions related to this Peercast, the first question asked companies to identify the name of their primary Payroll outsourcing provider.  Even though the original poll had a long list of provider alternatives, just three were utilized by the poll respondents.  ADP was clearly dominant, with 44% of the companies using their services, with IBM and SafeGuard both at 4% each.  The most popular response was actually no provider at all since 48% of the companies do not outsource their payroll process.

The second poll question inquired about the level of satisfaction member companies have with their Payroll outsourcing provider, with 60% being “Satisfied”, with 40% indicating that they are “Indifferent”.  What is most interesting is that none of the companies indicated that they were “Very Satisfied” or “Unsatisfied”, but instead gravitated towards the middle of the satisfaction scale.  Acceptable performance, but nothing out of the ordinary seems to be the overall message.

What role does outsourcing play in your company’s overall Payroll strategy?  If an outsourcing relationship is in place, how effective are you in managing it?

Who are your peers and how are you collaborating with them?

“Peercasts^TM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer Mail^TM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees. 

“iPolling^TM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer Mail^TM, members can easily communicate at any time with others who participated in iPolling.