LONDON--(BUSINESS WIRE)--Technavio market research analysts forecast the global payroll outsourcing services market to grow at a CAGR of close to 6% during the forecast period, according to their latest report.
The market study covers the present scenario and growth prospects of the global payroll outsourcing services market for 2017-2021. The report also lists hybrid and fully outsourced as the two major product segments, of which the hybrid segment accounted for more than 72% of the market share in 2016.
According to Abhishek Sharma, a lead analyst at Technavio for IT professional services research, “Establishing an efficient and streamlined payroll system within an organization requires high upfront investment. Therefore, companies are outsourcing payroll services to focus on their core product offerings and remain competitive in the market.”
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Technavio analysts highlight the following three market drivers that are contributing to the growth of the global payroll outsourcing services market:
- Growing need for payroll cost visibility
- Escalating demand to reduce payroll-related costs
- Growing adoption of integrated sourcing strategies
Growing need for payroll cost visibility
Economic and cultural globalization, the extension of manufacturing processes across geographies, and the widespread use of lean methodologies are driving demand for payroll cost visibility. Transnational organizations often seek contracts that confer global visibility of costs and aggregate reporting of payments, employee data, and other services. Multi-country contracts provide flexibility and scalability that helps operators to venture into virgin markets.
Clients typically opt for vendors with domain expertise and those that conform to strict service level agreements. The primary focus includes providing a hassle-free environment for HR professionals to drive and develop strategic activities such as workforce planning and talent management, rather than spending time on administration and transactional duties. Therefore, payroll outsourcing service providers are developing solutions that promote self-service by employees in a bid to reduce administrative workloads.
Escalating demand to reduce payroll-related costs
Payroll outsourcing service providers manage all the processes involved in paying employees. Organizations typically prefer outsourcing their services overseas to countries that can offer low costs and greater return on investment. In-house payroll management incurs comparatively more costs for hiring staff and adopting the latest technologies. Vendors are offering solutions with low costs to generate more revenue from businesses and enabling greater scope of control.
“Companies are also concerned about the costs associated with technology acquisitions as well as the support and maintenance of internal IT teams. Payroll outsourcing eliminates these associated costs to deliver a consistent performance to companies,” says Abhishek.
Growing adoption of integrated sourcing strategies
Many companies are integrating their business and technology solutions in a bid to improve productivity and innovation while keeping costs in control. Neo-sourcing, an evolution of the BPO models, is the integration of IT with payroll outsourcing. Neo-sourcing combines management of back office operations and technology to create process re-engineering for business transformation and optimization. Its benefits include process optimization, cost reduction, reduced cycle time, access to best global practices, and improved productivity. The integrated outsourcing strategy will help vendors remain competitive in the market owing to the increase in the number of HRO contracts focusing on payroll services.
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