Payroll Services Industry Procurement Intelligence, Supplier Intelligence, Supplier Ranking, Pricing & Cost Structure Intelligence, Best Practices, Engagement Model, Low & Best Cost Country, Day One Analysis Report, 2020 - 2027

Procurement Outlook

A payroll service provider is a company that specializes in payroll operations for their customers to ensure that the client’s employees are paid on time without any discrepancy and the client’s legal obligations related to payroll are met. The matrices that a payroll service provider operates with a monitoring employee work time and attendance, setting up or maintaining the direct deposits to a salary account, calculation of payroll taxes, calculation of incentives, bonuses, or other similar variables included in the payroll of their client’s company, integrating third party 401(K) and employee benefit plans, ensuring, storing and sharing payment records, and ensuring compliances related to payroll as mandated by the state or nation. However, in the age of bundled services, a service provider often provides an assortment of functions like deposits and withdrawals, withholding and payment garnishment, and new-hiring reporting to name a few. Therefore, prices that are charged are often charged for the bundled services provided rather than just payroll options unless that is the specific requirement.

Demand Outlook

The global market for payroll service was valued at USD 9.08 billion in 2020 and is projected to grow at a CAGR of 4.4% between 2020 and 2027. From a growth standpoint, the growth rate is comparable across all geographies. From a customer segmentation perspective, the maximum growth is expected to come from multi-country payroll contracts. Multi-country payroll services are currently representing just over 15% of the overall payroll services industry. North America and Europe are the dominant markets for payroll services and APAC is emerging as a major region for payroll service. There is a surge in cloud migration with several payroll service providers shifting to cloud-based software which streamlines payroll calculation. Among the types of services provided, cloud-based software is expected to register the fastest growth rate among all types of payroll services based on installation.

Cost Drivers

The COVID-19 pandemic led to several changes for the payroll services category. Consumers have demonstrated a trend to opt for a single global provider with an MCPO sourcing model. Also, the service providers are opting to shift to a cloud-based service model. While these appear to be separate industry drivers, one thing that remains common is the reduction in geographic dependencies. Along with this, comes an increase in automation of tasks and hence fewer analyst hours spent over redundant or iterative tasks.

Constraints

There are several pricing options used in the industry and also the presence of several low-cost service providers. This low-cost competitiveness puts a toll on profit margins on the overall industry. In addition to this, China and several EU nations have strict regulations regarding data sharing which makes it difficult for single global service providers to consolidate their data points. These factors make it difficult for a payroll service provider and impact their operational capabilities.

Supply Chain

The key payroll service providers are ADP LLC, NGA Human Resources, Sopra HR Software, Workday, Ceridian HCM, CGI Group, Paychex, Infosys, Intuit, Paychex, SafeGuard World International, IBM Corporation, Hewlett Packard Enterprise Development LP, etc. The payroll services industry is fragmented with several players operating in the market, most of them providing a host of services along with basic payroll management and calculation. The industry uses a host of pricing strategies, however, pay per payslip/per employee per month and tiered pricing models are the most commonly used pricing models across the industry. Grand View Research will help our client identify the best-suited suppliers by mapping their core capabilities and operational efficiency.