These days, we’re used to outsourcing tasks without too much thought. From meal-prep subscription kits to software that helps us complete our tax returns, most of us rely on external services to lighten our to-do lists.
When it comes to managing payroll, though, outsourcing can feel like a big step. Not only do you need to consider how a provider handles payments, but also how well they manage the complexities of managing different tax laws and compliance regulations.
Outsourcing payroll can save you a lot of time, but it’s important to make sure you have the right solution. That’s why we’ve put together this guide on the questions you need to ask any potential provider — and yourself — before making a decision.
We’ve also included tips and insights from experts with hands-on experience in building and managing global payroll systems:
- Michael Nierstedt, Payroll Product Director, Multiplier
- Sagar Khatri, Co-Founder and CEO, Multiplier
- Anna Lettink, Global Payroll Expert and HR Tech Strategist
How does outsourcing payroll work?
Outsourcing payroll means hiring a third-party provider to take over some or all of your payroll responsibilities. Payroll outsourcing providers typically offer the following features designed to simplify payroll management while addressing the specific challenges your business faces:
- Payroll processing
- Wage calculation
- Tax withholding
- Payroll tax filing
- Wage garnishment processing
For global payroll teams, the right payroll partner or platform will offer a solid set of features designed to reduce your administrative workload, minimize compliance risks, and deliver the insights you need to manage payroll costs.
Why outsource payroll?
For growing companies managing distributed workforces, staying compliant with varying tax laws, managing multiple currencies, and ensuring accurate payments across different countries is time-consuming. And costs quickly add up, including hiring additional payroll staff and paying penalties and fines for errors.
Outsourcing payroll brings several key benefits because it can:
- Keep your payroll compliant with local labor laws and tax regulations.
- Reduce the risk of errors by eliminating manual calculations with automated processes and integrated payroll data.
- Gives your team time to focus on more strategic activities.
Questions to ask your payroll provider
What comes to mind when you think about outsourcing payroll? Is it saving time and money? Or the peace of mind that comes from knowing compliance and tax regulations are handled? Maybe you’re still unsure if a payroll service is the right choice — and that’s exactly why asking the right questions is so important. Here are some you should consider.
1. Do you support payroll in all of the countries my business operates in?
If your business is global, you have two options when outsourcing payroll – use local vendors in each of the countries you operate in or choose global payroll software that centralizes payroll processes and data from across regions.
If you opt for the route of using local vendors, be aware that this can cause you problems as you scale – particularly if you choose a provider who only operates in one country.
Juggling multiple vendors means extra admin, data siloes, and even late payments. As Nierdstedt says, “Instead of managing a single relationship, you have an account manager in each location. This leads to a lot of missed requirements and delays.”
2. What does your service model include?
When choosing a payroll provider, it’s essential to understand exactly what features are included with their service model as this can vary widely. Look out for:
- Localized payslips to support a global team.
- A solution you can directly make payments in in multiple currencies.
- Reports tailored to each country and variance and statutory reports based on local laws.
- Strong onboarding/offboarding support.
Beyond this, as Nierstedt explains, you’ll want a partner who helps you understand the best approach for managing your global workforce.
He says, “The important thing is finding a partner who provides you not only with access to a hub for all of your countries but also assistance and guidance on when you should be using an Employer of Record (EOR) or global payroll — whatever makes sense for your business and when.”
As Nierstedt points out, the right provider won’t just offer a one-size-fits-all solution. They’ll take the time to understand your business needs and help you figure out the most efficient and cost-effective way to manage payroll across different countries. This kind of strategic guidance can make a huge difference as you scale.
3. What automation features do you offer?
Automated technology is a cornerstone of efficient global payroll management, facilitating accuracy, scalability, and more precise compliance across different regions. Ask if the provider offers automated features that cover:
- Tax calculations.
- Compliance updates.
- Benefits administration.
Pro-tip from Nierdstedt – ask for product screenshots. “ My general rule is if a service provider isn’t showing screenshots and/or videos of their products, then they aren’t a technology-first organization,” he says.
4. Does your system integrate with my existing tech stack?
Proper integration with your HR, finance, and accounting tools is a non-negotiable for multi-country payroll. That’s why you need to ask how well a payroll provider’s system integrates with your tech stack.
Nierstedt recommends asking the following specific questions:
- Is my system of record going to come over into payroll?
- Can the provider bring the right data into payroll and not create syncing issues that lead to data being inconsistent?
- Will benefits and retirement data integrate correctly?
- Is the general ledger data from payroll syncing with my accounting system?
Without proper integration, manual data entry and reconciliation can become time-consuming. Some systems use outdated software, making integration difficult and limiting functionality. As Nierstedt notes, “Solutions are often built on outdated software. They can’t deliver all the features you need, but they also come with lock periods that make it hard to integrate with other solutions.”
The best payroll provider or platform should easily integrate with your existing tools, ensuring efficiency and accuracy as your business grows.
5. What do the migration and implementation processes look like?
Understanding the timeline for migration and implementation is essential — and it’s something many companies underestimate. As Nierstedt says, “Where I usually see people get tripped up is with implementation times — and how long it takes for the first payroll run”. A delayed first run can lead to missed paydays, so you must communicate your expectations from the start.
You’ll also need to know how much time is needed to collect and migrate company and employee data, inform employees about the transition, and test the new system.
Skipping these steps or rushing them increases the risk of errors — which Lettink warns happens far too often: “I’ve seen a lot of payroll errors because if you’re moving from one payroll provider to another, you run into situations where the former has done something where you think, ‘Huh, what’s going on here?’.”
6. What does your pricing model look like?
One of the key benefits of outsourcing payroll is reducing costs, but unexpected fees can quickly eat into those upfront savings.
Ask about the provider’s pricing structure, which features and services are included in each tier, and whether there are additional costs for services like compliance support or international payments.
7. What level of customer support and account management do you offer?
You shouldn’t have to rely on a customer service portal for every issue or question you have. Look for providers offering dedicated support from professionals familiar with your business and the software. Ideally, you’ll have access to local HR and legal experts who offer timely, well-informed solutions without third-party delays.
Speaking of support, Khatri explains how Multiplier’s approach to customer support stands out. Instead of relying on local payroll providers to get back to you, he explains, “With Multiplier, you’ll have 24/7 support and a dedicated customer success manager who understands your needs and keeps you updated. You won’t have to reach out — they’ll reach out to you, and you’ll never deal with bots.”
8. What security measures do you take to ensure my business and employee data is safe?
With the number of reported data breaches involving employee information at its highest since 2019, protecting employee data is more important than ever.
Ask providers about their global payroll security levels and risk management procedures. And if they’re not SOC 2 Type I, and Type II, and SOC 3 certified — some of the highest data security and compliance standards— then you’ll want to cross them off your list.
Questions to ask yourself before outsourcing payroll
Once you’ve assessed each provider, take a step back and ask yourself these key questions to help you pinpoint which is the best fit for managing your global payroll needs.
1. Why are we considering outsourcing payroll?
Ask yourself: What are we hoping to achieve? Are we looking to save time, reduce costs, or improve efficiency? Is budget our main concern? Or are we expanding into new territories and need local compliance expertise? Understanding your goals will help you choose the right provider to meet your specific needs.
Outsourcing payroll can help you achieve all of the above and more, helping you remain competitive by gaining a clearer view of your data and strategy. As Khatri explains: “Payroll is the largest expense any company has and it’s a huge issue if you don’t understand where your company is going.”
2. What is our overall budget for the outsourcing process?
Establishing a clear budget helps you pinpoint which providers meet your operational needs without unexpected costs. But remember to consider other global payroll costs such as setup charges and the time you might lose navigating between different local vendors.
3. What are the must-have services we need to handle payroll?
When evaluating payroll providers, consider which services are non-negotiable for your business. Nierstedt recommends asking the following questions:
- Does it calculate what I need it to?
- Does it make tax payments I expect?
- Can it support paying employees in all necessary locations?
- Does it integrate properly with my systems?
- What types of reports can it provide?
Take control of global payroll with Multiplier
Most local payroll services come with limitations — such as a lack of scalability and features to ensure compliance across multiple regions — and, ultimately, are not equipped to help you manage your global teams. These challenges often lead to inefficiencies and increased risks when managing global payroll.
But by using a global payroll platform like Multiplier, you can avoid these issues. Designed to simplify and enhance payroll management, Khatri explains. “If you have operations in ten countries and you’re using ten payroll vendors, it doesn’t have to be that way. You can use one payroll vendor for 150 countries and different types of workers.”
In fact, Multiplier takes global payroll management to the next level by taking on and simplifying the most complex and time-consuming tasks, so you don’t have to. “We just give you one invoice in your currency, convert it to local currency, and take on the liability of paying employees on time, meeting tax authorities, and statutory contribution requirements. Imagine, all you have to do is pay your invoice,” says Khatri.
Plus, you can be sure that your data is not siloed or lost between different workflows. Khatri says, “We’re deeply integrated with HRIS and accounting systems. If you’re using Workday or Oracle, we’re integrated with those. The flow between accounting systems happens automatically as well, and we can also integrate contractor data.”
With these features, Multiplier removes the frustration of fragmented payroll services spread across multiple countries, setting you up for success and cost savings.
Want to learn more? Book a demo.
