Process Transformation for Compliant, Cost-Efficient, and Employee-Centered Payroll

Payroll is a backend, internal business function with the sole objective of paying people in an accurate and timely manner. Hence, process transformation has never been the topmost priority for payroll professionals. Lately, businesses are transforming their people, processes, and technology to improve compliance and costs and manage ancillary priorities such as unifying global payroll operations, generating payroll insights, improving employee experience, and facilitating seamless employee mobility. Companies are increasingly partnering with payroll service providers to consolidate their vendor base, improve digital adoption, and offer on-demand payroll. As a result, the number of active clients of payroll business process transformation service providers has increased by 21% between June 2022–June 2023.

Both demand- and supply-side trends are covered in Avasant’s Payroll Business Process Transformation 2023–2024 Market Insights™ and Payroll Business Process Transformation 2023–2024 RadarView™, respectively. These reports present a comprehensive study of payroll business process transformation service providers and closely examine the market leaders, innovators, disruptors, and challengers. They also provide a view into key market trends and developments impacting the payroll services space.

We evaluated 27 service providers across three dimensions: practice maturity, domain ecosystem, and investments and innovation. Of the 27 providers, we recognized 20 that brought the most value to the market during the past 12 months.

The report recognizes service providers in four categories:

• • Leaders: ADP, Alight, EY, Mercans, and Neeyamo
  • Innovators: Ceridian, Ramco, Safeguard Global, SD Worx, TCS, and UKG
  • Disruptors: activpayroll, IBM, Infosys, TMF Group, and Wipro
  • Challengers: BIPO, Conduent, OneSource Virtual, and Zalaris

Figure 1 below from the full report illustrates these categories:

“Enterprises cannot afford payroll errors,” said Avasant Partner Shabnum Grewal. “For compliant, cost-efficient, and employee-centered payroll, firms need a consolidated payroll vendor base, optimized upstream processes, and employee self-service tools.”

The reports provide a number of findings, including the following:

• • Enterprises are partnering with multicountry payroll service providers who can reduce dependence on multiple payroll aggregators and unify payroll processes across different geographies without compromising local compliance. As a result, multicountry payroll service provider revenue grew by 13% between June 2022–June 2023.
  • Over 35% of organizations are planning or considering new HCM investments between January 2023–July 2024 for their payroll function. Through the adoption of HCM suites and integration with payroll engines, firms are simplifying upstream payroll processes, such as employee data management, to minimize downstream payroll errors.
  • Businesses are creating a differentiated brand value by helping employees decide when, where, and how they get paid. By offering flexible payroll methods such as earned wage access cards and payroll cards, firms improve employee financial and mental well-being and engagement.
  • To facilitate enterprise payroll transformation, payroll service providers are increasingly expanding their local delivery presence, investing in digital technologies such as AI, automation, and analytics, and strengthening their talent pool through domain and digital training of their payroll professionals.

“Regulatory, domain, and digital expertise are key prerequisites of the payroll function,” said Ritika Nijhawan, senior research analyst with Avasant. “Service providers offering regulations tracking services, multicountry payroll engines, last-mile support, and mobile payroll tools have an edge in transforming the enterprise payroll function.”

The Payroll Business Process Transformation 2023–2024 RadarView features detailed profiles of 20 service providers, along with their solutions, offerings, and experience in assisting enterprises in their payroll processes.

This Research Byte is a brief overview of the Payroll Business Process Transformation 2023–2024 Market Insights™ and Payroll Business Process Transformation 2023–2024 RadarView™ (click for pricing).