Global Expansion

Evaluating Global Payroll & Global HRIS Vendors

January 25, 2023
Brett Ungashick
Founder

Companies are more open than ever before about hiring employees outside of the US. Talent is often hard to find locally, and with the advent of remote work, companies are opting to expand their recruitment efforts overseas. However, employing a global workforce requires having the right global employment tools, such as a global payroll system and a global HRIS. Learn more about what you should look for if you're building an international workforce:

In the early years of OutSail, it was rare for clients to ask for help in finding a global payroll provider or a global HRIS. However, ever since the pandemic in early 2020, the concept of remote / hybrid work took hold and the number of international payroll and international HRIS requests that OutSail receives has gone through the roof.

Before 2020, hiring a global workforce used to be something that only large companies did, since they had the budgets to set up foreign entities and pay consultants to help ensure compliance in these new regions.

But, over the last 10 years, there has been an explosion of new international payroll providers, global PEOs (professional employer organization), global EORs (employer of record) and HRIS systems that have specialized in supporting international companies.

Sifting through the marketplace can be challenging, especially since so many of the best global HR software providers are new. If you're having trouble finding the right fit for your business, you can leverage OutSail's free global advisory services.

This article will get you up-to-speed on the technology landscape and considerations for multinational companies:

What is Global HR Management?

Employment Types

The first thing to understand when running a global workforce is the difference in employment types and employment classifications. As a US employer, there are three main ways that you can employ a non-US employee:

Employee Under Foreign Entity

The original methodology for hiring a global employee was to set up an entity in that employee's country. For instance, if OutSail wanted to hire an employee in Brazil, we would setup an OutSail Brazil entity in Sao Paolo. Once the entity was established, then we would hire the employee to that entity.

The challenges with this approach are that setting up entities can be time consuming and expensive. Additionally, once the entity is set-up you will likely have to hire an in-country accountant or bookkeeper who can pay the employee properly.

Employee Under Global PEO or Global EOR

International PEO or international EOR are a new type of service that has come to prominence in the past decade. These global EOR companies will do the heavy lifting of setting up entities in foreign countries. When you want to hire an employee in a foreign country, you would partner with a global PEO and ask that company to hire the employee on your company's behalf.

The global PEO will, then, hire that person in a compliant manner with contracts that are locally compliant. The PEO will then take on the responsibility of paying that person, giving them the proper holidays off and mandated employee benefits and manage all tax payments.

This process can be very quick and hands-off for companies, but the outsourced services can be somewhat expensive.

Contractor

The final methodology for hiring internationally is to employ someone as a contractor. This path requires the least resistance, as a company will send over an employment agreement and then pay the contractor monthly according to their hours worked.

However, this option can be the most risky since employers run the risk of misclassifying their workers and could be sued or fined by the local governments for not obeying proper employment laws.

Blog: How to Choose the Right Form of International Employment

Onboarding / Offboarding

Once you've chosen the employment classification that will work best for your prospective employee, your risk tolerance and your budget, then you need to ensure you are hiring the employee in a compliant manner.

There are platforms that will help you generate locally compliant employment agreements so that you can ensure you don't get tripped up by compliance issues early on. Additionally, an in-country global payroll provider or a global PEO or global EOR should manage this service for you.

The same process is true when firing an international employee. You will want to have a service or consultant that can guide you through this process, since the laws around lawful termination vary greatly from country-to-country

HR Management

Once the employee is onboarded, you will then be responsible for ensuring that the employee is following local norms and laws throughout their time with your company:

Benefits

One important consideration with an international workforce is understanding the statutory benefits, or mandated benefits, that you are required to offer each employee in that particular country.

Timekeeping

Another consideration when managing your international employees is ensuring that timekeeping is done properly. You will need to be aware of any laws around mandated breaks, overtime rules and holidays. There are also unique accrual rules and leave requirements in each country

Talent Development

Finally, you will want to also consider having a system in place for tracking the performance of your international employees, giving them opportunities to grow & develop and having regular performance review and compensation management discussions.

Global Payroll, Global Tax & Global Compliance


Finally, the most important part of the global employment picture is ensuring that employees receive their proper pay each period, that taxes are remitted properly and that all employee paperwork is filed.

If you set up an entity abroad, this responsibility will fall on your team and most companies will hire an in-country bookkeeper or accounting firm to manage the process for them. If you are partnering with a PEO or EOR vendor, they should take responsibility for this. If you are hiring employees as contractors, the employee will be responsible for paying their own taxes.

Who are the best Global HRIS & International Payroll Companies?

Very few solutions are capable of offering global payroll, global EOR/PEO and global HRIS, so companies are typically taking a best-in-class approach by partnering with a few different providers and working to integrate those platforms.

The Best Global HRIS Systems

Blog: The Best Global HRIS Systems for 2022

You can read more detailed write-ups on the vendors in the blog linked above, but a few leaders in the market are:

HRIS Matching App:  Input your project goals and see your top HRIS matches - for free
The Best Global Payroll Vendors

Blog: The Top 8 Global Payroll Platforms for 2022

You can read more detailed write-ups on the vendors in the blog linked above, but a few leaders in the market are:

  • CloudPay
  • Activpayroll
  • Blue Marble
  • Papaya Global
  • Velocity Global
  • Safeguard Global
  • ADP Celergo
The Best Global PEO Vendors

Blog: Comparing the 10 Best Global PEO Vendors

You can read more detailed write-ups on the vendors in the blog linked above, but a few leaders in the market are:

  • Globalization Partners
  • Velocity Global
  • Atlas HXM
  • Rippling
  • Deel
  • Remote
  • OysterHR
  • Multiplier

Blog: The Best Payroll Systems to Integrate with NetSuite

Considerations When Evaluating Global Payroll & Global HRIS Providers?

1.) Global Offices

Many companies are claiming to be 'good for global employment' these days, but one tell-tale sign that a company is equipped to serve a global audience is if they, themselves, are also a global organization.

The US market is so large that companies like Paycom and Paylocity can serve only domestic clients and build huge businesses, but companies that start outside of the US have to learn to serve multi-national organizations immediately.

These companies also tend to have support teams in most time zones across the globe which improves response times for your distributed teams

Blog: How to Select the Right Global PEO Vendor

2.) Language Support

Another characteristic of a good global HRIS system is that the system has native language support for multiple languages. Many domestic HRIS's will use Google Translate to offer additional languages to customers, but these translations can lead to less nuance and leaves non-US employees feeling de-prioritized. Finding a provider that natively supports a multitude of languages in their platform is another key factor.

Blog: How to Negotiate an HRIS Agreement

3.) Global Compliance & Localization

Maybe the most important feature of a good global HRIS is if it can help you stay compliant in multiple regions

A domestic HRIS that is pretending to be global will say 'Yes, you can store employees in our system and give them access to some modules.'

But what those systems can't do is ensure that the way your international employees are using the system is locally compliant. A great global system should have local rules engines built in to let you know if an employee's leave request or payment schedule is locally compliant.

To be considered a global HR management system, a vendor must display confidence in understanding both the legal requirements in each country and the local norms for employment. Without having both, the system is only pretending to be a 'global' solution.

4.) Global Payroll

Finally, very few, if any, international HRIS's also have global payroll built into the system. However, increasingly we are seeing companies like ADP and Paylocity buy global payroll platforms. Other vendors, like Workday and UKG, are developing deep partnerships with global payroll solutions.

Similarly, global payroll vendors like Velocity Global and Papaya Global are going the other direction and trying to build global HR management features so they can be considered all-in-one platforms.

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If your company is going global and you need help finding the right partner, let us know!

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Brett Ungashick
Founder
Brett is the founder of OutSail. He spent the early part of his career selling HR software before switching sides and going to work for the people buying the software.

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