Choosing global payroll solutions: in-house vs. outsourced

Choosing the right global payroll solution can make or break your international operations. Should you keep it in-house or go outsourced? Get in touch with our specialists to learn more.

• Choosing between in-house and outsourced global payroll depends on business size, international footprint, compliance needs, and growth goals.
• Outsourcing simplifies payroll, improves compliance, and supports global expansion, especially through EOR models.
• In-house payroll offers control but requires substantial investment in HR infrastructure, compliance expertise, and scalable systems.

Going global is top of mind for today’s ambitious businesses. International expansion has become more accessible than ever due to solutions like Employer of Record (EOR). As a result, the option to scale beyond domestic borders has quickly become a permanent stepping stone on the pathway to success for start-ups and SMEs.

In fact, according to HSBC, 450,000 UK businesses are “poised to seize international opportunities." 87% of those already trading internationally plan to expand further.

When commencing operations overseas, the management of payroll across multiple jurisdictions can pose a serious challenge. Employers must decide whether to handle global payroll in-house or outsource it to specialist providers.

This decision can have long-lasting implications for compliance, efficiency, cost control, and employee satisfaction. As companies strive to remain competitive and compliant in the rapidly evolving global marketplace, understanding the pros and cons of each option is key to scaling successfully.

Let’s explore the main factors business leaders should consider when choosing between in-house and outsourced global payroll solutions.

For more information on global payroll, visit our Ultimate guide to global payroll.

Understanding global payroll complexities

Global payroll goes far beyond the administration of wages to dispersed employees. A comprehensive global payroll strategy covers compliance with local tax regulations, currency conversion, benefits, reporting requirements, and alignment with international labour laws. Organisations seeking to pay internationally must also address issues such as visa and immigration services, global regulatory compliance, and data protection.

When managing a global workforce, especially across multiple countries, ensuring consistent and accurate payroll processing becomes a logistical and administrative burden. This is where the decision between in-house and outsourced payroll becomes pivotal.

In-house global payroll: the pros and cons

Handling global payroll in-house allows businesses to retain complete control over their processes and data. This option may suit larger organisations with established international HR teams and sophisticated internal tech infrastructure. Companies with capacity for in-depth monitoring and protection of sensitive information may have the resources to manage such a complex task.

However, in-house payroll also comes with significant challenges.

Regulatory risk

Each country has its own unique tax and employment laws. Managing compliance across jurisdictions can be time-consuming and error-prone without the support of global compliance services. Making sure your business stays compliant when seeking to hire international talent can be difficult on your own.

Resource burden

In-house payroll requires dedicated personnel, technology, and training. It can become costly and inefficient, especially when employing staff overseas in small numbers across many locations.

Limited scalability

As businesses grow and enter new markets, their payroll systems must adapt quickly. Scaling an in-house solution is often difficult without a robust international HR infrastructure.

In-house payroll might be viable for companies that already operate across multiple countries and possess the necessary compliance and HR capabilities. However, for many small to mid-sized enterprises, the investment in staff, systems, and expertise may outweigh the benefits.

Outsourced global payroll: efficiency and expertise

Outsourcing global payroll to international payroll providers or global payroll companies offers businesses access to specialist knowledge, technology platforms, and compliance support. These payroll outsourcing companies help ensure timely and accurate salary payments while keeping up with changing local laws.

Forbes notes that “a professional payroll company can help save a business owner’s time, allowing them to focus on their business and customers. But to create a system that can accomplish this, it’s important you know enough to know what to ask for from your payroll provider and if your provider is delivering what was promised.”

For more information on this topic, visit our article What to look for in a global payroll providers.

Aside from peace of mind, outsourcing your global payroll needs comes with a number of benefits.

Compliance assurance

Global payroll providers have experts dedicated to staying up to date with international regulations. This ensures compliance and reduces the risk of fines, penalties, and reputational damage.

Cost control

Using tools like salary benchmarking, outsourced providers assist companies to accurately calculate employee-related costs. This allows them to develop cost-efficient global hiring strategies.

Focus on business

Outsourcing payroll services to a dedicated provider frees HR and finance teams' time. This allows them to focus on strategic priorities instead of administrative payroll tasks.

Support for remote work employees

With the rise of payroll work from home arrangements and global mobility, outsourcing offers a seamless solution for managing remote and dispersed teams.

Leading international payroll providers often integrate salary benchmarking tools and provide insights from global HR consultancy services to help inform compensation strategies.

Key considerations

When deciding between in-house and outsourced global payroll, businesses should assess several important factors.

Business size and global presence

Start-ups and SMEs may not have the in-house resources needed to manage complex payroll requirements. In such cases, outsourcing to a global HR consulting firm or an EOR company can streamline the process.

Compliance and risk management

Understanding the permanent establishment and different types of permanent establishment is critical. Companies that unknowingly trigger a permanent establishment can face unexpected tax liabilities. Outsourced payroll providers often work alongside global compliance services to ensure these risks are mitigated. They also ensure that they store payroll data securely and in line with all legal requirements.

Cost-effectiveness

For businesses wishing to calculate cost of employee or benchmark salaries globally, outsourcing can offer access to advanced salary benchmarking tools and cost calculators. This is essential for financial planning and talent acquisition.

Speed of global expansion

When considering how to expand your business internationally, efficiency matters. Outsourcing enables expedited market entry, especially when hiring overseas employees. EOR payroll solutions can support businesses in hiring without needing to set up a local legal entity.

Technology and integration

In-house payroll solutions often require significant tech investment. Outsourced providers offer access to integrated platforms that simplify global employee management, payroll, and compliance reporting. For example, Mauve Group’s platform, Mauve Insight, offers a centralised database, where all payroll and worker data is accessible at any time, and stored to the highest standard of security.

In a recent article for Startups Magazine, Mauve Product, Services, and Innovation Director Joanna Hart noted that “From personalising benefits to fit local markets to managing payroll for globally distributed teams, HR tech enables organisations to stay agile in a rapidly changing environment. Scalable, adaptable platforms ensure seamless access to payslips and foster connection within remote teams.”

The role of global HR and EOR services

Outsourcing payroll often goes hand-in-hand with partnering with an international HR consultancy. These experts provide end-to-end support, from supporting with global payroll to managing international hiring, benefits administration, and legal compliance.

An EOR company acts as the legal employer on behalf of a client, handling payroll, tax filings, and compliance. This is particularly useful when companies are employing staff overseas but do not wish to establish a local entity.

Paying international employees and contractors

Another key factor to consider is paying international employees and independent contractors. All countries have their own rules regarding the payment of foreign independent contractors, and misclassification can result in fines and reputational damage. Outsourced providers help navigate these complexities while ensuring adherence to employment laws.

Salary benchmarking and workforce planning

Outsourcing global payroll often includes access to tools like salary benchmarking, which bolster compensation strategies across different markets, allowing businesses to retain their competitive edge when entering new markets.

Supporting remote and global teams

As hybrid and remote work models become the norm, many companies are redefining the meaning of remote work. With payroll outsourcing, managing an internationally dispersed team becomes simpler, allowing businesses to support remote work employees and teams across multiple jurisdictions without sinking time and resources into global workforce management.

How Mauve can help you to make the right payroll choice

Mauve Group's Global Payroll team handles the end-to-end process of paying your overseas employees, via a fully managed solution.

By leveraging our global payroll service saves you time, money, and resources. It allows you to avoid the expense and time and resource investment of establishing a local payroll team in every region or purchasing specialised payroll software.

With thirty years of experience, ISO 27001 certification from the British Assessment Bureau, solutions in over 150 countries, and an innovative centralised platform, Mauve Insight, we’re here to help you to quickly and compliantly pay your overseas staff. Contact us, today.

Frequently Asked Questions

• What are the benefits of outsourcing global payroll?
  Outsourcing provides compliance support, cost control, access to specialist tools and knowledge, and simplifies managing an international workforce, especially for companies without local entities.
• When should a business choose in-house global payroll?
  In-house payroll may suit large companies with the necessary infrastructure, expertise, and resources to handle international payroll and compliance internally.
• How does outsourcing help with international compliance and expansion?
  Payroll providers and EOR companies help businesses comply with local tax and employment laws, avoid permanent establishment risks, and quickly enter new markets without setting up local legal entities.