When MNCs grow internationally, the question of whether to depend on ERP systems at their new branches is a much debated one. With far lesser employee numbers in these new areas, MNCs are often at a loss whether to rely on its otherwise costly ERP or strategically hire an outsourcing provider in its place.
Outsourcing providers, on the other hand, are usually shy to approach large MNCs. One assumption is that they (being global corporations) need no local support at all; let alone sealing a deal with them. However, reality is far from what meets the eye.
Everyone wants to economise, and MNCs are Top on That List
Enrolling ERP systems in foreign locations is an expensive affair, especially if you are servicing small number of employees. MNCs understand that outsourcing providers operate in huge scale and provide foolproof service both in terms of quality, data security and timely pay. Hence their only alternative is an outsourcing provider – who can provide unified HR and payroll solutions for a good price.
International Banking and Payroll Delay
Rolling out salaries through international banks to employees stationed in other continents can be very tricky. Often these transfers are carried out at the risk of random deductions and hidden charges. Penalties and service fees are other hurdles that MNCs need to negotiate during every pay cycle. This, in turn, spills over to other non-pay related factors like insurance, severance and medical benefits. If MNCs take a long time to address these glitches, it can have serious ramifications on employee morale and performance.
Single point of contact
MNCs based in operating markets like, say, the ASEAN, would prefer a single contractor based out of a single location rather than multiple offices. That said, they are also happy to receive communication in one language even though payroll, processes and paperwork are carried out in other local languages.
Business Standards and Corporate Laws
MNCs listed under exchanges either in the Eurozone, Americas or Eastern regions are bound by regional business laws. Corporate laws like the Sarbanes-Oxley (SOX) Act of 2002, for example, controls financial dealings of all MNCs listed in the USA. What applies under this Act must be implemented in the company’s financial transactions even if the company operates in Asian markets. Payroll providers are well aware of such requirements and even help meet domestic statutory regulations that are central to the MNC’s survival in the operating market.
A Business Partner-cum-Regional Manager
While merging, expanding or even starting up pilot ventures, MNCs are always looking for support on labour cost knowledge, payroll monitoring and employee mobility. Hiring an outsourcing partner automatically guarantees MNCs a negotiator, people manager and legal advisor. This creates an environment where companies can flourish without having to worry over minute but critical delivery factors.
Feedback & Reporting at all Times
The alliance makes them a strong voice in strategic decision-making and reporting discrepancies in banking and other monetary affairs. The company also stands to benefit from visa/immigration advice while hiring large foreign workforce. As the MNC grows in the continent, the outsourcing company can always be relied on to provide consistent, accurate and prompt services regardless of another merger, transition, or exit of a country manager. For any MNC, the question always comes down to how it can manage affairs at the ground in a manner that is seamless, inexpensive, effective and consistent. Payroll outsourcing providers have always been the best option to ensure excellent regional management.
Manish Mehta, Co-Founder of Propay Partners
Manish is a frequent contributor for the New Straits Times, SME Magazine, The Edge and others. He has also spoken at seminars organised by the ASEAN Strategic Leadership Institute, Marcus Events and was also interviewed by Business FM radio station. Passionate, energetic, and soft-spoken, Manish is well-loved by colleagues within and outside the company for his highly systematic and process-driven work. Under his leadership, Propay Partners has grown in leaps and bounds and continues to expand in the ASEAN region. To view more of his content, click here.