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Mad but Trapped – The Global Aggregator Model

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Aggregator Model - Mad but Trapped

Mad but Trapped – The Global Aggregator Model

There are some clear benefits of working with a global payroll service provider. You get a single invoice so you Accounts Payable team are happy. Your Procurement team has to deal with fewer vendors, which makes their lives easier. The global provider promises you one standard way of collecting all your payroll input data globally. And yes, you are with a major global brand so this gives you a warm fuzzy feeling that they will do the right thing and that the service will be tip top. You may be working with the local country unit of the global aggregator and they may indeed be doing a good job. And the slick sales and marketing machine of the global vendor may convince you to leave your local in country partners behind for the global aggregator model that the global provider offers.

 

However, as we are building Payzaar and talking to a large number of customers – many of whom have been experiencing the global aggregator model for a number of years – we are finding that in many cases these benefits are being outweighed by a lot of shortcomings and frustration that start to emerge once the customer begins to operate under the aggregator model:

 

  • Barriers to the person who can answer a query – the global payroll aggregator model puts layers between your payroll team and the person processing your payroll who can fully answer your question. This leads to time lags to resolve the query putting everyone under pressure and leading to people being paid incorrectly.
  • Shortened payroll cut off times – your in-country payroll provider or inhouse payroll teams provided you with longer windows to communicate your payroll changes. This is now dramatically reduced creating internal operational challenges. New joiners in some cases have to wait 6-7 weeks for their first pay to show up in their bank account.
  • Data import is still highly manual and labour-intensive – in many cases predicated on the customer manually or semi-manually filling out essentially Excel forms to submit their data inputs to the local payroll processor
  • Few options if there is a service issue in one of the countries – if you wish to change the local vendor you are likely going to lose the global controls and aggregation. If you stick with the vendor, you are stuck with the sub-par service. A lose-lose situation.

 

So why don’t these customers simply move on and find a different global provider if they are experiencing these frustrations? Well, the global aggregators are smart. They have built some significant lock-in mechanisms – i.e. barriers of departure – into their model.  If you want to change the aggregator, you essentially have to change all your local payroll solutions… again (that’s the dirty little secret that no sales rep working for a global provider will tell you). And most organisations have no appetite to undergo the trauma of ripping and replacing the existing payroll infrastructure again any time soon, so they stick with the aggregator. Which is great for the aggregator, not so good for customer and their ability to choose what’s best for them.

 

The demands on the payroll team are high and increasing. You are constantly being expected to do more with less; you are facing ever changing regulation and increasing complexity around employee pay structures; the internal benchmark for success for payroll is 100% right all of the time. This is a service-oriented business and the traditional global payroll aggregator model is pushing service and choice to the background. At Payzaar we think that there is a better way.

 

Learn more about what makes Payzaar unique here.

Trevor Townsend
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