59.6%
of European companies outsource their payroll to some degree, or consider doing so
European companies increasingly willing to outsource payroll
November 9, 2021
Payroll outsourcing is on the rise all across Europe. That’s one of the main conclusions from a large-scale employer survey conducted by SD Worx, a leading European HR and payroll services provider. Today, a whopping 6 in 10 European companies contract or consider contracting an outsourcing partner to (partially) take care of their payroll. Belgium leads the way: only 27% of Belgian companies are prepared to completely manage their own payroll themselves. The fast-changing business environment and complex legislation lay at the root of this trend.
While the general willingness to outsource HR tasks hasn’t changed much since early 2020, payroll outsourcing is becoming more appealing. Especially Italy and Switzerland stand out. Whereas only 17% of Italian and 6% of Swiss companies would outsource all (or part) of their payroll in 2020, the numbers increased to 26% in Italy and 20% in Switzerland. Interest in outsourcing payroll also increased in Belgium, France, the Netherlands and the UK, compared to last year. The smallest differences are seen in Germany, with only a change of 0.5%, and Ireland, with a decrease of 1%. About 43.5% of European companies are actively trying to improve their payroll processes, either with running projects or with projects to be carried out in the short or long term. Also, payroll jumped from number 8 to number 3 on the list of HR areas that are most suitable for outsourcing. An explanation might be that HR managers prefer to hand this to a trusted partner because of legislation complexity on the one hand and business continuity on the other hand. Only HR processes automation and compliance with socio-legal regulations appear to be outsourced more. Both are topics that make the process of payroll go smoother.
Companies in Belgium, Italy, the Nordics, the Netherlands, the UK, France, Switzerland and Austria consider payroll to be among the top 5 HR areas in which third parties can make a difference. The only countries where payroll outsourcing doesn’t make the top 5 are Poland, Ireland, Spain and Germany.
Extensive outsourcing formulas in demand
Diving a bit further into the data, we notice that especially the average number of European companies that mostly or entirely outsource their payroll (or consider doing so) has risen significantly, from 16% in 2020 to 21% in 2021.
What’s more, the comprehensive outsourcing of payroll to trusted partners took a big leap all across Europe in the past year. Some remarkable observations from below data: Belgium still leads the pack for payroll outsourcing, Switzerland triples in numbers and Ireland is the only surveyed country to record a lower appeal for extensive payroll outsourcing.
Fertile ground for payroll outsourcing
What accounts for the growing popularity of payroll outsourcing? “The explanation is multifaceted”, says Patricia Molenaar, Senior VP Mid-Market, Enterprise, International and Public Markets at SD Worx. “First of all, payroll outsourcing opens up space for more strategic projects. From talent acquisition to learning and development, most HR teams can think of plenty of ways to better invest their time post-pandemic than in the repetitive, labour-intensive handling of payroll. Secondly, it provides peace of mind in hectic times. Technological advances and cloud-based services guarantee secure and easy-to-access data for remote workforces, while your partner takes care of compliance with new rules and regulations – wherever you do business. Finally, there’s also a human factor. Outsourcing some (or all) of the most tedious and error-prone payroll tasks lifts the team spirit in a department that has been under constant pressure for years.”
Want to learn more? Download our free e-book 'Payroll outsourcing: why now and how to excel' and get all the ins and outs on payroll outsourcing.
About the employer survey
The online survey ‘The Future of Work and People in Europe 2021’ was conducted in June 2021. Over the course of several weeks, SD Worx managed to reach nearly 3,000 companies in 12 European countries/regions (Belgium, the Netherlands, France, Italy, Spain, Ireland, Germany, Austria, Switzerland, Poland, the UK and the Nordics). The participants ranged from small companies (less than 100 employees) to large enterprises (more than 1,000 employees) and represent all 4 economic sectors.