When to outsource HR and payroll operations and when to keep them inhouse When to outsource HR and payroll operations and when to keep them inhouse

When to outsource HR and payroll operations and when to keep them inhouse
17 Nov 2017

A big question for any organisation as it expands internationally is whether to keep administrative HR and payroll services in-house or whether to outsource them. Deciding on the right course of action will, of course, depend on the requirements of the business in your target country. But here are some considerations:

Outsourcing

For companies that are just testing a new market or have never operated in a given location before, it may save time and money to explore outsourced HR and payroll options. A third party provider will take care of day-to-day tasks, employee responsibilities, recruitment activities and the like and will also ensure compliance with local labour laws and other regulations.

Today, there is an abundance of different service types to choose from. Here are two popular options:

1 International professional employer organisations (PEOs)

If you wish to move into a new country quickly and hit the ground running, hiring an international PEO may be the answer. These providers will hire employees for the organisation without it needing to establish a foreign subsidiary. They act as an employer of record and manage everything from benefits administration and employee induction to recruitment and finding work permits. They could be considered a “full-service outsourcing” option.

2 Modular approach

If you already have a presence in a given country but are looking for support in one or more areas of your HR function, a modular approach may be what you are looking for. Going down this route enables you to pick and choose from a range of providers in areas such as:

• International payroll
• Benefits administration
• Onboarding
• Recruitment
• Visa processing.

Keeping operations in-house

Companies that have already set up a foreign subsidiary and have a critical mass of employees in their target market would likely benefit most from having their own in-house HR and payroll team. The advantages of this approach are:

• Control of internal processes
• Trusted internal resources
• Less reliance on vendors
• Decreased cost when critical mass is reached
• Buy-in from key stakeholders in relation to the HR and payroll culture and communication style.

To ensure that the team can work as effectively as possible, however, make certain its members have a means of communicating both formally and informally with headquarters. Doing so will enable them to contribute to business decisions and feel connected with the wider company culture. Conducting regular conference calls, GoTo meetings, and frequently sharing pertinent documents all help in this regard.

“Companies that have already set up a foreign subsidiary and have a critical mass of employees in their target market would likely benefit most from having their own in-house HR and payroll team.”

 

Ben Wright, CEO at Velocity Global, has over a dozen years of experience in helping companies expand overseas. Building on his experience as a Certified Public Accountant, leader of an interim finance executive firm, and having global partnership responsibilities at an international services firm, Ben has become a recognised thought leader on international back office operations. He frequently speaks on international business panels and travels globally to present on topics such as international employment, permanent establishment, global payroll, and expatriate assignments. He is a graduate of the University of Notre Dame and is passionate about helping companies succeed globally.

A big question for any organisation as it expands internationally is whether to keep administrative HR and payroll services in-house or whether to outsource them. Deciding on the right course of action will, of course, depend on the requirements of the business in your target country. But here are some considerations:

Outsourcing

For companies that are just testing a new market or have never operated in a given location before, it may save time and money to explore outsourced HR and payroll options. A third party provider will take care of day-to-day tasks, employee responsibilities, recruitment activities and the like and will also ensure compliance with local labour laws and other regulations.

Today, there is an abundance of different service types to choose from. Here are two popular options:

1 International professional employer organisations (PEOs)

If you wish to move into a new country quickly and hit the ground running, hiring an international PEO may be the answer. These providers will hire employees for the organisation without it needing to establish a foreign subsidiary. They act as an employer of record and manage everything from benefits administration and employee induction to recruitment and finding work permits. They could be considered a “full-service outsourcing” option.

2 Modular approach

If you already have a presence in a given country but are looking for support in one or more areas of your HR function, a modular approach may be what you are looking for. Going down this route enables you to pick and choose from a range of providers in areas such as:

• International payroll
• Benefits administration
• Onboarding
• Recruitment
• Visa processing.

Keeping operations in-house

Companies that have already set up a foreign subsidiary and have a critical mass of employees in their target market would likely benefit most from having their own in-house HR and payroll team. The advantages of this approach are:

• Control of internal processes
• Trusted internal resources
• Less reliance on vendors
• Decreased cost when critical mass is reached
• Buy-in from key stakeholders in relation to the HR and payroll culture and communication style.

To ensure that the team can work as effectively as possible, however, make certain its members have a means of communicating both formally and informally with headquarters. Doing so will enable them to contribute to business decisions and feel connected with the wider company culture. Conducting regular conference calls, GoTo meetings, and frequently sharing pertinent documents all help in this regard.

“Companies that have already set up a foreign subsidiary and have a critical mass of employees in their target market would likely benefit most from having their own in-house HR and payroll team.”

 

Ben Wright, CEO at Velocity Global, has over a dozen years of experience in helping companies expand overseas. Building on his experience as a Certified Public Accountant, leader of an interim finance executive firm, and having global partnership responsibilities at an international services firm, Ben has become a recognised thought leader on international back office operations. He frequently speaks on international business panels and travels globally to present on topics such as international employment, permanent establishment, global payroll, and expatriate assignments. He is a graduate of the University of Notre Dame and is passionate about helping companies succeed globally.

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