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Featured article: Selecting Vendors - why safe isn't always best

By Keith Rodgers, co-founder, Webster Buchanan Research

A few years ago I was sitting in a meeting with a European payroll team discussing their international payroll vendor options. For the first 45 minutes, I heard a litany of complaints about their incumbent supplier  – about the rude staff, the poor employee service, the unacceptable error rates, the hidden costs.  And for the next 15 minutes, I heard everyone round the table explain why they thought it was a good idea to renew their contract.

This puzzling insistence on staying loyal to providers who’ve failed to deliver is surprisingly common in payroll – and at face value, it’s hard to comprehend. If I buy a bottle of wine that tastes like brake fluid, I don’t go back and order a 12-bottle case. If I order a minicab and the driver turns up 30 minutes late driving a battered Ford Fiesta that smells like an ashtray, next time I pick a different cab firm. The only times I accept that I don’t have any choice are when I deal with cable TV providers and tax authorities – and I see those experiences as God’s way of ensuring we understand the concept of misery so we can truly appreciate the finer things in life.

Of course, there are plenty of good reasons why companies prefer not to shift from their incumbent payroll providers, whether domestic or multi-country. You have to go through a vendor sourcing exercise, which can be a time and resource drain. You’ll probably need to adapt to a new way of working. You’ll have to tackle the multiple risks that come with any change project. And for a period of time during the handover, you’re in the uncomfortable position of working with a provider you’ve just dumped, which is about as much fun as sharing a house with your ex-spouse while the divorce papers go through.

Little wonder, then, that many payroll practitioners prefer to stick with the devil they know.

When it comes to multi-country payroll, however, staying with familiar providers isn’t always the best option. If you’re just starting out on an international payroll initiative, chances are you’re working with a wide variety of national providers around the world today, so some kind of change is inevitable – and the real issue is how wholeheartedly you embrace it. Do you go to your incumbent national providers, see which ones offer international services and send them a Request for Proposal (RFP)? Do you do a Google search, see who comes up on the first page and contact them? Or do you carry out detailed, in-depth research to get a feel for the full extent of your options?

Many companies start out in international payroll assuming that their choice of provider is going to be dictated by price and geographical coverage – but there’s a lot more to it than that. As you dig down into the market, you find a wide range of factors to distinguish between vendors, from the size of employee populations they’re comfortable serving, to the quality of the technology platforms they rely on, the robustness of their financials and in some cases, even the vertical markets they specialise in. You also discover that the choice of vendors may be wider than you first expected. Some of the leading providers in multi-country payroll are household names – in as much as payroll gets discussed in your household – but there are a number of reputable companies that do pretty much zero marketing, growing by referrals and word of mouth. 

It’s worth assessing all the options – even if you ultimately decide that one of your current vendors is the best fit – because the choices you make today will stay with you for years to come. If you think it’s hard to shift from a single country provider, imagine what it’s like changing a vendor that runs your payroll in ten, twenty or more countries. Do you really want to be sitting round a table in a few years’ time listing all the problems you have with your multi-country payroll supplier – before concluding that the only option you have is to stay with the devil you know? 

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