What questions to ask when outsourcing payroll in 2023

Running and managing payroll is never easy, but it becomes increasingly difficult as an organization expands into new markets. With every new payroll country, the complexity of global payroll operations increases.

This rising level of complexity in payroll management is the main reason why many businesses decide to outsource payroll to external service providers. However, there are many aspects to consider before finally taking the leap and putting payroll into the hands of a third party.

In this blog post, we’ll give you an overview of the different steps in the decision-making process and highlight what questions to ask when outsourcing payroll in 2023.

The first question businesses need to answer before outsourcing payroll is whether or not using an external payroll service provider will actually be advantageous to them. In other words, does it make sense to outsource payroll from an operational and financial point of view?

Here are some questions that can help you determine if outsourcing is the best approach for managing your global payroll:

• Do you have the internal expertise, resources, and capacities to manage payroll for a growing number of countries?

• What is the overall cost of running payroll in-house and how does it compare to the cost of payroll outsourcing?

• What is the available budget you can allocate to outsourcing payroll operations to a third party?

• What are the main problems you face regarding global payroll management and could they be solved through payroll outsourcing?

• What could the extra time and resources gained through outsourcing be used for instead?

• For which countries and employee populations would it make sense to outsource payroll?

• How is global payroll compliance managed under the current set-up? Would outsourcing be a significant improvement in terms of compliance?

Once you’ve come to the conclusion that outsourcing is, indeed, the best option for your business, it’s time to start thinking about the scope of services you need. Questions to ask during this part of the process include:

• Which payroll functions need to remain in-house and which ones will be outsourced?

• Will partly-managed payroll services be enough or will you require fully managed payroll services?

• Are there any additional services, such as a global payment solution, you would like your prospective payroll partner to provide?

The next set of questions to ask when outsourcing payroll revolves around finding the right service provider. When choosing a payroll company, businesses should consider both general service-related criteria and industry-specific criteria. This includes questions like:

• Does the provider have a proven track record?

• Is their pricing model transparent?

• How much do they charge for their services?

• Is the platform through which they provide their services user-friendly?

• What is the range of services they cover?

• What is the experience of other customers with the provider?

• Will the provider be able to meet your payroll needs as you keep expanding into new markets?

After narrowing it down to a selection of a few prospective service providers, it’s time to clear up some final details regarding the service you will get. Make sure to ask any potential service provider about the following aspects:

• What measures are taken by the provider for ensuring payroll security?

• Are they able to process global salary payments in a quick and cost-effective way?

• Do they leverage automation to replace manual work and reduce the risk of payroll errors?

• Do they provide a software platform that can be integrated with other workforce management tools?

• Will you have a dedicated account manager for queries and urgent issues?

• Will there be additional support for employees?

• Do they offer additional services like Employer of Record (EOR) or contractor management?

After all the preliminary research is done and the process of choosing a payroll partner is wrapped up, all that’s left to do is to clear up the details regarding the initial set-up process. This includes:

• What data does the payroll provider need for processing payroll?

• How long will the initial set-up process take?

• How will the data be transferred to and loaded into the provider’s system?

• Will there be a parallel payroll run to make sure that all the processes run smoothly?

• Is the provider flexible with regard to the implementation date to avoid busy periods for payroll, such as year end?

• What is the cut-off date for payroll changes?

Whether or not to outsource payroll is an important decision that requires careful consideration. There is a long list of questions businesses should ask before making a final decision regarding their global payroll set-up. These questions range from assessing the general need for payroll outsourcing to determining the scope of the required payroll services to finding a suitable payroll provider.

Choosing a payroll service provider is arguably the most important and also the most time-consuming part of the process. Using a global payroll solution like Lano can help businesses speed up the process and reduce the risk of choosing the wrong service provider.

With Lano’s global payroll services, businesses can compliantly manage payroll and payments for their international teams across a range of over 170 countries. Our global network of vetted in-country payroll partners makes it easy to find the right service provider and set up local payroll in record time

Book a demo with one of our payroll experts to find out more about how Lano can help you simplify your global payroll operations.