You could pick and choose the most affordable external
administrative services in each country that you operate in, but it
can often result in even greater inefficiency.
When looking to make a significant purchase, why do many of us
look for the low-cost solution, and often choose – what
appears on the surface – to be the easiest option?
In reality, the low-cost solution doesn't always prove to be
the easiest. Hidden issues can arise and result in extra effort and
resources – which are easily overlooked when considering
This poses the question: what is more important, price, or
choosing the right solution?
A company operating across multiple jurisdictions could quite
easily secure cost-efficient services by finding a local payroll
supplier in, for example Germany, to process the salaries of its
few local German employees. The company may source another cheap
deal by going straight to a South African provider for local
accounting support. Head to Thailand, Israel and Colombia repeating
this process; whether it is for payroll services, accounting and
tax compliance, or international entity management.
The company could seek out the cheapest version of the
administrative services needed in each country... but there are
significant downsides to this approach. Most notably, your company
is shouldered with negotiating and managing different contracts and
service levels for different services. Now multiply that by the
number of countries you operate in; and remember the providers are
using all kinds of different service models, cost parameters, and
There's no service consistency. The administration and
coordination burden is huge. Third party relationship control is
overwhelming and vastly underestimated.
Today, companies are growing faster than ever, setting up
entities and gaining employees from a global talent pool in places
far from their HQ. Annual compliance costs are rising, management
of global subsidiaries and special purpose vehicles is becoming
more complicated, as is tracking the numerous tax filing deadlines.
The leaders in these global businesses; CEOs, CFOs, HR Directors,
General Counsel; are led to consider if the local supplier approach
remains the right one.
Global consolidation of your smart-sourced services can bring so
Global service providers offer economies of scale based upon the
number or services you purchase, so the premium for the single
global supplier can be minimised. Of course, the global provider
will rarely want to compete with pricing of a local service
provider for let's say, a two-person accounting or payroll team
operating out of their home office in Mexico City. But is what
you're saving in fees worth what you might be sacrificing in
quality, efficiency and consistency across multiple countries?
It lowers your risk
It goes without saying that a strong, robust, reliable
international provider cannot be compared with very cheap –
but sometimes very risky – local options. If you're a
business with many different contractual agreements in place in
multiple jurisdictions, what confidence do you have that all of
these providers are actually keeping you legislatively compliant?
Are they meeting the great variety of local reporting standards? Do
they have ISO 27001 accreditation?
It is not unusual for businesses to have to establish specific
internal departments purely to control their numerous in-country
suppliers, checking they are being kept up-to-date with the local
legislation and regulations. Negotiating and renewing multiple
contracts every few years. These companies are consequently
building overheads into a system that simply shouldn't be
Now consider if the real cost of the cheaper, 'easier'
option is actually more expensive than the global solution?
It helps you achieve greater business visibility
Do you need all of your global payroll costs in a single format
and currency to aid your global analysis? Or the ability to share
reports with management located around the world? Do you aspire to
greater control and consistency in your global operations? Local
provision makes this exceedingly difficult to achieve. Global
consolidation of services with one supplier just makes sense and
unlocks the potential for you to be able to
answer such challenges.
Realise business potential
When you streamline your operations, you have the ability to put
things in place that most probably didn't exist before.
Efficiency, consistency, compliance and a confidence in a solution
that leaves you free to focus on reaching your business goals and
setting even higher ones.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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