As business processes require fast turn-around time, a lot of companies today are forced to adopt new technologies to deliver results efficiently. Payroll processing is one of the most complicated tasks that need a reliable and secure platform to calculate and pay employee salaries on time.
Knowing how complex is the payroll department, the process doesn’t end up there. That is why payroll services in the Philippines are gaining popularity from certain countries because companies need a payroll service provider that can handle a variety of payroll functions.
It’s no secret that the Philippines has been a leader in the global business process outsourcing industry for years. In 2022, it is expected to grow at 7.8% based on the Roadmap 2022 of the Philippine IT-BPM sector published by the IT and Business Process Association of the Philippines (IBPAP). Contact center outsourcing still leads to the distribution of BPO activities, followed by back-office services, IT outsourcing, healthcare, and other disciplines. Payroll outsourcing as part of the back office domain is projected to grow and will contribute big to the industry.
Reasons for Outsourcing
One of the reasons for outsourcing payroll is the visible reduction of costs. The rising expenses on people, time-consuming process, supplies, tools, and technologies allow business owners to explore partnerships with a payroll service provider. Thus, cost advantages are the biggest attraction for foreign companies outsourcing to the Philippines.
When you outsource payroll management in the Philippines, you get to work with top Filipino payroll specialists with knowledge and experience with payroll processes that are compliant with your local labor law. Moreover, Filipino payroll professionals who work in the BPO industry are well-adept with different top payroll software that are widely used in the US, UK, Australia, and Singapore.
Another reason for companies that utilize payroll service provider in the Philippines is the lack of local expertise. The growing economy has contributed to new market segments establishing their presence in the Philippines such as offshore companies, multinational corporations, regional players, and the growing number of small and medium-sized businesses in the country require local payroll services.
Some companies are still testing the waters and do not want to establish a physical office address in the Philippines during the trial phase of their business expansion, that is why they need the help of an HR and payroll outsourcing outfit that can legally represent them in the local market.
The global payroll outsourcing market is expected to grow in the years to come, likewise for the Philippine payroll services industry. It is projected to hit U$22.8B, in 2027 a CAGR of 3.5% from the estimated growth of U$17.9B in 2020.
The main drivers for outsourcing are the rising adoption of cloud-based platforms and efficient management system. Companies particularly small and medium-sized businesses would shift to outsourcing as the cost for acquiring and maintaining payroll technology platforms could skyrocket the costs.
As there are challenges and restraints to the growth of the payroll outsourcing services industry, the Philippines remain optimistic that it would soon make a mark in the global payroll services market.