Expect Payroll Outsourcing to Proliferate in Financial Services and other Struggling Sectors

Our March 2009 “User Requirements from Payroll Services” research study found that today’s most critical payroll management necessities include:

•  Consistent, standardized payroll processes across the enterprise, particularly when the organization operates in multiple countries or is poised to enter into other geographies

•  Common-view access to complete payroll data across the enterprise to enable HR to make better strategic decisions

•  Cost reduction resulting from increased efficiency, self-service capabilities and Web 2.0 technologies

Thus, two very recent payroll outsourcing deals come as no surprise. On May 19, 2009, ADP announced it had entered into a payroll outsourcing engagement with Swiss Re, a leading and highly diversified global reinsurer. During the five year contract, ADP will service the payroll needs of up to 10,000 employees and 2,500 pensioners across Switzerland, Germany, the U.K. and the U.S., and smaller populations across more than 20 other countries. And on June 9, 2009, NorthgateArinso announced it had entered into a payroll outsourcing deal with One Housing Group, a non-asset holding parent that brings together three housing associations serving London and adjacent countries under a group structure.

It also comes as no surprise that both of these contracts are in industries struggling in today’s current economic climate, as cost reduction in many areas including services delivery is key to their survival. We anticipate seeing an increase in signed contracts for managed payroll services globally – particularly within the financial services, manufacturing and professional services industries – especially those which enable client organizations to leverage the provider’s technology solutions and self-service/Web 2.0 implementations to reduce overall HR costs and improve global data management and integration without heavy capital outlay requirements.

Until next time, happy sourcing!

Helen Neale, Research Director, Human Resources Outsourcing, NelsonHall

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