Market Overview

The Global Payroll Outsourcing Services Market was valued at US$ 9.9 Billion in 2022 and is expected to reach US$ 19.5 Billion by 2030, growing at a CAGR of 7.2% from 2022 to 2030.

Payroll outsourcing services are one of the fastest-growing segments in the global payroll outsourcing services market. The adoption of payroll services is increasing in various organizations to reduce costs. Organizations can also outsource entire services and outsource single processes as well. In-house payroll management is very expensive. Payroll outsourcing capabilities are popular in human capital management (HCM), finance and accounting (F&A), and various fulfillment centers. Human Resources also uses payroll outsourcing services more often than other departments in an organization.

Demand for payroll outsourcing is growing due to increasing emphasis by MCPOs and MNCs on cost reduction and time efficiencies. The increasing popularity of the payroll outsourcing services market with employee self-service (ESS) and human resources is driving the payroll outsourcing services market. Advancements in commerce activities are increasing the demand for payroll outsourcing due to functions such as team management and staffing. Increased emphasis on automation implementation is very likely to boost the market during the forecast period and growing demand for cloud-based payroll, security, functionality, scalability, easy access, and low cost boosts the payroll outsourcing market.

The Payroll Outsourcing Services Market has been recently published by Contrive Datum Insights to its huge database which helps to shape the future of businesses by making well-informed business decisions. It offers a comprehensive analysis of various business aspects such as global market trends, recent technological advancements, market size, shares, and new innovations. Furthermore, this analytical data has been compiled through data exploratory techniques such as primary and secondary research. Moreover, an expert team of researchers throws light on various static as well as dynamic aspects of the global Payroll Outsourcing Services market.

Significant Market Dynamics

Drivers

Outsourcing payroll allows the organization to concentrate on its core operation.

Payroll outsourcing saves a substantial amount of time that would otherwise be spent calculating the payroll of every employee based on their position and attendance. Numerous solutions for payroll outsourcing offer an integrated database for payroll and data on attendance. This comprehensive approach automates the entire process, from time capture to payroll, as a closed-loop workflow. In addition, outsourcing payroll to a third-party provider enables businesses to save valuable work hours. They are more productive and have more time to focus on strategic initiatives for their company. Consequently, this is a significant market driver for payroll outsourcing.

Growing demand for payroll cost accountability

Globalization of the economy and culture, the expansion of manufacturing procedures across geographies, and the pervasive adoption of lean methodologies are factors driving the demand for payroll cost visibility. Contracts that provide worldwide visibility of expenses as well as aggregate reporting of payments, as well as employee data, and other services are frequently sought by multinational organizations. Multi-country contracts offer operators the flexibility and scalability to enter underserved markets.

Restraints

Increasing cyberattacks will impede market expansion

It is anticipated that as the number of intrusions on such systems increases, product adoption will decrease. Increasing cybersecurity threats are anticipated to impede market expansion. In addition, continual regulatory changes in the system are anticipated to limit market expansion during the forecast period. It is anticipated that the presence of mature payroll services will limit market expansion.

Due to the increased risk of data breaches and cyber theft, businesses are very concerned about the security of their sensitive data when outsourcing business operations to service providers. They choose service providers that adhere to stringent compliance and regulation policies concerning information sharing. The data includes employees' names, social security numbers, addresses, salary information, health records, and biometric information, which is extremely sensitive information.

Constant regulatory alterations

During the forecast period, it is anticipated that the continuous changes in regulatory standards and rules will hinder the market.

Geographical transition of standard payroll processes

During the forecast period, the market is expected to be restrained by issues related to the geographic transition of standard payroll processes. Typically, the personnel of large organizations is dispersed globally. A standard process must be phased across geographies using automation and specialized teams. However, the undertaking is challenging for businesses because they must adhere to the regulatory policies of certain regions.

Opportunities

Modernization of the payroll mechanism

In response to the rapid development of technology, businesses are swiftly modernizing their work systems and automating their processes. In addition, the traditional system of maintaining employee records for the payroll system has been modernized, and the majority of businesses today hire third parties to handle their payroll so they can focus more on their primary businesses. In addition, organizations view outsourcing payroll as a fundamental amenity for managing their payroll systems, and the traditional method of manually recording each and every detail of their employees is rapidly declining as more and more organizations outsource payroll to third parties. Consequently, this factor will provide significant lucrative opportunities for market expansion in the coming years.

Expanding Technological Advancement and Automation

Market expansion is anticipated to be fueled by the rising demand for technological innovations across industries. It is anticipated that increasing government initiatives for digitalization will spur system adoption. It is anticipated that increasing demand for cloud-based payroll will accelerate market expansion. In addition, the characteristics of this system, such as simple access, scalability, functionality, security, and low cost, are anticipated to drive market expansion over the forecast period. The demand for updating foreign tax laws is anticipated to increase product adoption. Increasing demand to avoid potential penalties is expected to accelerate the growth of the payroll outsourcing market.

Challenges

Misunderstanding regarding payroll outsourcing services

Lack of awareness about payroll outsourcing services is one of the primary factors restraining market expansion. In addition, small businesses are hesitant to invest in new technology due to their limited budgets and funding, which inhibits the market during the evaluation period.

Key Market Updates

• In 2020, Dodo Point announce its strategic collaboration with Carry Protocol, the blockchain project that aims to return control of data privacy and monetization back to the consumers. Under this strategic collaboration, consumers who share the data with Carry Protocol are getting rewarded with CRE tokens.
• In 2020, MiL.k, the blockchain-powered rewards platform, announced its entry into a strategic partnership with Shinsegae Duty-Free, a Seoul-based luxury retail space chain, in order to provide loyalty point compatibility and management. This strategic collaboration allows Shinsegae customers to get connected to their existing rewards accounts through the mobile application offered by MiL.k.

Market Segmentation

By Type

In 2021, the payroll outsourcing market's hybrid segment experienced the greatest development by type. This is due to the fact that hybrid outsourcing of payroll offers an organization control over the payroll system, while only the time-consuming and manual payroll-related tasks are outsourced. In addition, a hybrid system ensures that the HR team is able to manage payroll without relying on others to complete their duties. In addition, hybrid systems reduce expenses by nearly half because the work is divided between the organization and a third party.

By Business Size

The global payroll outsourcing market is segmented by business size into large enterprises and small and medium businesses. The segment of sizable enterprises is anticipated to experience the highest CAGR during the forecast period.

By Application

The market is segmented by Application into national, international in scope, and mid-market segments. The multinational segment is capturing the largest share of the payroll outsourcing market because it enables companies to manage voluminous employee and information data.

By Industry Vertical

The global payroll outsourcing market is segmented by industry vertical into BFSI, healthcare, manufacturing, retail, IT & telecom, and others. During the forecast period, the BFSI segment is anticipated to record the maximum CAGR.

Regional Insights:

North America will offer maximum growth opportunities in payroll outsourcing processing during the forecast period.
According to our research, this region will contribute 54% of the global market growth during the forecast period. Most organizations in North America rely on outsourcing service providers. North America will experience steady growth during the forecast period in mid-market and transatlantic contract segments covering both US and European operations. Companies in North America look for payroll services in low-cost countries like India.

Geographically, the global Payroll Outsourcing Services market has been analyzed in various regions such as North America, Europe, Asia-Pacific, Latin America, the Middle East, and India. The global region is dominating this market in the upcoming future.
Scope of the Report

Key Vendors

Workday is the dominant provider of cloud-based enterprise applications for finance, human resources, and planning. Workday was founded in 2005 and provides applications for financial administration, human capital management, and analytics to the world's largest corporations, educational institutions, and government agencies. Workday has been selected by organizations spanning from mid-sized businesses to Fortune 50 corporations.  For more information, please visit http://www.workday.com.

Safeguard Global develops adaptable solutions for businesses that wish to flourish in the global economy. Safeguard Global enables success through wiser, more efficient global employee management, recruitment, payroll, onboarding, expense management, and more through a combination of workforce management data, technologies, services, and local market expertise. The company was founded in 2008 and has its headquarters in Austin, Texas. For additional information, please visit https://safeguardglobal.com.

Ramco is a next-generation enterprise software company whose multi-tenant cloud and mobile enterprise software in HR and Global Payroll, ERP and M&E MRO for Aviation is disrupting the market. Ramco Systems, a division of the USD 1 billion Ramco Group, employs Innovation and Culture to differentiate itself in the market. On the Innovation front, Ramco has been concentrating on moving towards Active ERP utilizing Artificial Intelligence and Machine Learning and Event Driven Architecture by implementing features such as Talk It - which enables users to complete transactions using simple voice commands - and Bot It - which enables users to complete transactions through natural conversations. Mail It – conduct business with the application simply by sending an email; HUB It is a one-screen solution designed to accommodate all user activities; Thumb It is a form of mobility in which the system provides users with the option to select rather than input values. Prompt It is a cognitive ability that permits the system to complete the transaction and prompts the user for authorization.

Intuit It is a 1983-founded software development company with headquarters in Mountain View, California. Intuit is a global technology platform that assists its clients and communities in overcoming the most significant financial obstacles. They serve millions of customers around the world with TurboTax, QuickBooks, Credit Karma, and Mailchimp, and they believe that everyone should have the chance to prosper and work consistently to find novel techniques to deliver on this belief.

Infosys is a global leader in digital services and consulting for the next generation. The business assists clients in more than 50 countries with their digital transformation. With over three decades of experience administering the systems and operations of global enterprises, they expertly guide their clients through the digital transformation process. They accomplish this by empowering the enterprise with an AI-powered foundation that facilitates the prioritization of change execution. In addition, they empower the business with agile digital at scale to deliver unprecedented performance and client satisfaction. Their agenda for continuous improvement is driven by the development and transfer of digital skills, expertise, and ideas from their innovation ecosystem. Visit www.infosys.com to learn how Infosys (NYSE: INFY) can assist your business in navigating the future.

Market Key players

• Hewlett Packard Enterprise Development
• IBM
• ADP
• Ceridian HCM
• NGA Human Resources
• Paychex
• Accenture
• Caliber Point Business Solutions (Hexaware Technologies)
• CGI Group
• Genpact
• Infosys
• Intuit
• Ramco Systems
• SafeGuard World International
• Workday and Dodo Point
• k

Major Market Segments Covered

On the Basis of Type:

• Hybrid
• Fully outsourced

By Business Size

• Small Business
• Medium Business
• Large Business

On the Basis of Application:

• Mid-market
• National
• Multi-national
• Others

By Industry Vertical

• BFSI
• Consumer and Industrial Products
• IT and Telecommunication
• Public Sector
• Healthcare
• Others

By Region

• North America
  • US
  • Canada
  • Mexico
  • Rest of North America
• Europe
  • Germany
  • France
  • Italy
  • Spain
  • UK
  • Nordic Countries
    • Denmark
    • Finland
    • Iceland
    • Sweden
    • Norway
  • Benelux Union
    • Belgium
    • The Netherlands
    • Luxembourg
  • Rest of Europe
• Asia-Pacific
  • Japan
  • China
  • India
  • Australia
  • South Korea
  • Southeast Asia
    • Indonesia
    • Thailand
    • Malaysia
    • Singapore
    • Rest of Southeast Asia
  • Rest of Asia-Pacific
• The Middle East & Africa
  • Saudi Arabia
  • UAE
  • Egypt
  • South Africa
  • Rest of the Middle East & Africa
• Latin America
  • Brazil
  • Argentina
  • Rest of Latin America

Conclusion

One of the fastest-growing segments of the global payroll outsourcing services market is payroll outsourcing services.   When delegating business operations to service providers, businesses are extremely concerned about the security of their sensitive data due to the increased risk of data breaches and cybercrime. They select service providers that adhere to stringent compliance and regulation policies regarding the sharing of information.  In response to the rapid development of technology, businesses are rapidly automating and modernizing their work systems.  In addition, the characteristics of this system, such as easy access, scalability, functionality, security, and low cost, are expected to fuel market growth over the forecast period.  During the forecast period, this region will contribute 54% of the global market growth, according to our research.