How Remote work will impact global payroll

How Remote Work Will Impact Global Payroll

Since the Coronavirus crisis has spread around the world over the past year, the majority of business has gotten used to remote operations. Even businesses and functions that probably could have never imagined working from home had to adjust and improvise under imperatives of social distancing. Remote work will have an impact on global payroll.

While for many people remote work is still uncomfortable and cannot replace the physical collocation with their colleagues, the shift that has taken place over the past few months may well have long-lasting effects beyond the immediate crisis.

As the number of COVID-19 infections continues to rise globally, even with the vaccines being administrated and an encouraging outlook in the near future, many companies are preparing for a prolonged environment in which employees will not come into the offices but work from home. Google, for example, recently announced that its employees will work from home until at least the summer of 2021. In fact, some companies like Facebook, Twitter, Square, Slack, Shopify and Zillow have told their employees that they don’t ever have to come back to the office.

While the health crisis and the concern for their employees’ safety is certainly one big factor in the decision of these companies to keep their employees working from home, other more practical considerations also factor into the decision. The CFOs of many companies have quickly realized that remote work creates a ton of cost savings in office space rent and equipment as well commute and travel expenses. Especially in the economic uncertain times, CFOs may decide to leverage these cost savings beyond the timeframe that the immediate safety concerns last. 

Another dynamic we’re starting to see is more and more companies evaluating the possibility of shifting the remote work to offshore locations. As companies have quickly and by necessity figured out how to get the work done remotely, the next question that is being asked is: So why keep the work in high-cost locations if it can be done remotely? Why not shift the work to a lower-cost location? While not every job that can be done remotely may lend itself to being shifted to a low-cost, offshore location (due to language, skill sets and other constraints), many jobs that previously would have not been considered for offshoring will now undergo new scrutiny and may be shifted. 

Overall, we expect to see a strong acceleration in the shift of jobs to remote, low-cost locations over the coming months and years. And this applies not only for companies who are operating as multinational organizations by the nature of their business. Even companies that only serve a single domestic market may have realized through the remote work experience during the current crisis that setting up teams in remote locations halfway around the world is indeed possible, barring language and other potential constraints.

As a result, we anticipate the demand for global payroll solutions and global payroll expertise to increase. Companies that take advantage of the remote offshore labor model will need to figure out how to properly pay employees in these remote locations. So more global payroll services will be required. In order to simplify the experience for businesses that are used to operating in one single country location but are now setting up remote teams in offshore locations, integrated global payroll solutions like Payzaar that allow companies to manage all their payroll processes and data in a single platform will play an important role in this macro-economic shift in labor force. 

If your company is planning setting up remote teams in offshore locations, contact us to learn how we can help you ensure that payroll for these teams is handled in a compliant and efficient manner.

Marc-Oliver Fiedler

Marc-Oliver Fiedler

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