Payroll Outsourcing Services Market

Payroll Outsourcing Services Market Outlook (2023 to 2033)

The global payroll outsourcing services market was valued at US$ 17000 Million in 2022. During the 2023-2033 period of assessment, demand is expected to rise at a 6.1% value CAGR, likely to surpass a valuation of US$ 32607.5 Million by the end of the said forecast period.

Report Attributes	Details
Anticipated Base Year Value in 2022	US$ 17000 Million
Expected Market Value (2023)	US$ 18037 Million
Projected Forecast Value (2033)	US$ 32607.5 Million
Global Growth Rate (2023 to 2033)	6.1%
Market share of North America (2023 to 2033)	37%
Anticipated share of Asia Pacific Market(2023 to 2033)	31%
Prominent Players in The Global Market	ADP; Gusto; Infosys Limited; International Business Machines Corporation; Intuit Quickbooks; Keka Inc.; KPMG; OnPay; Papaya Global; Paychex; Sage Group plc; Square; SurePayroll; Vision H.R; Workday Inc.; Zalaris ASA

Payroll Outsourcing Services Market Revenue Analysis from 2018 to 2022 Vs Market Outlook for 2023 to 2033

Rising penetration of big data technologies, cloud computing, and other advanced technologies have prompted payroll outsourcing providers to transform services to a whole new level. As per market research and competitive intelligence provider Fact.MR, the market for payroll application services witnessed a 4.3% CAGR from 2018 to 2022. As enterprises strive to attain a competitive edge, payroll outsourcing services are a necessity.

Consistent upgradation of payroll applications to provide a seamless user experience is the need of the hour. By incorporating avant-garde breakthroughs, service providers are not only able to reduce operational costs, but also enhance their returns on investment. Furthermore, changing compliance and governance requirements are also widening the scope of payroll outsourcing services.

In the future, as more businesses rely on digital transformation, they are continuously innovating their approaches, ushering in efficiency, enhancing quality, and improving client experience. Whether it is to migrate, transform or build, deploying the right application strategy can work miracles.

Prominent Payroll Outsourcing Services Industry Growth Drivers

The Increasing Need for Payroll Cost Visibility Driving the Growth of Payroll Outsourcing Services Market

The increasing need for payroll cost visibility, escalating demand to reduce payroll-related costs, and increasing demand to standardize processes, technology, and governance are likely to drive market growth. Payroll outsourcing services are gaining traction across different industry verticals such as Services, Manufacturing, BFSI, Healthcare, and Retail.

Due to the time-saving and cost-effectiveness of payroll outsourcing organizations can focus on their core issue to run the business smoothly. North America and Europe are major adopters of payroll outsourcing services due to the presence of a large number of payroll outsourcing services vendors.

The Increased Adoption of Payroll Services to Drive the Market Growth

Rising penetration of big data technologies, cloud computing, and other advanced technologies have prompted payroll outsourcing to transform services to a whole new level.

The increasing adoption of payroll services in various organizations to reduce expenses is likely to drive the market during the forecast period. Finance and Accounting (F&A), Human Capital Management (HCM), and various service centers used payroll outsourcing services either for a single process or outsourcing the entire service. The growing popularity of employee self-service (ESS) and the payroll outsourcing market with human resources are driving the payroll outsourcing services.

The demand for payroll outsourcing services has increased owing to features like possessing security, functionality, scalability, easy access, and low cost. The growing trend of multi-country payroll outsourcing (MCPO), bundling payroll services, and process automation is further contributing to the market growth.

Which Market Challenges Are Hampering Payroll Outsourcing Services Market Sales?

The High Risk of Data Security May Limit the Market Growth

Although digital transformation has proven to yield major operational benefits, many enterprises are reluctant to implement it due to a variety of reasons.

The lack of awareness about payroll outsourcing services is one of the principal factors limiting the growth of the market. Also, Small enterprises are reluctant to make investments in new technology owing to the small budget and low funding thereby inhibiting the market through the assessment period.

Data breaches and cyber theft concerns are prompting businesses to not extensively adopt digitalization, as companies are very much concerned about confidential information which is limiting payroll outsourcing prospects to a significant extent.

Also, the payroll outsourcing developer is likely to face challenges in understanding the organizational technical demand and software customization based on enterprise demand. This is likely to impact the demand for payroll outsourcing services during the assessment period.

Comparative View of Payroll Outsourcing Services Markets

Payroll Outsourcing Services Market :

Attributes	Payroll Outsourcing Services Market
Growth Factor	Growing awareness regarding hair transplant and the growing prevalence of successful hair transplant surgeries to boost the market growth.
Opportunity	Increased demand for standardized the process, technology, and governance are expected to provide opportunities for the growth of the market

Cloud-Based Payroll Software Market :

Attributes	Cloud-Based Payroll Software Market
Growth Factor	Increasing applications in small and medium enterprises is likely to drive the cloud-based payroll software market .
Opportunity	Integration of AI and Analytics with cloud-based payroll software is expected to emerge as a significant opportunity during the assessment period.

Payroll & HR Software Market :

Attributes	Payroll & HR Software Market
Growth Factor	The rising need for work efficiency, in the organization is one of the factors improving the growth of the payroll and HR software market.
Opportunity	The rising popularity of software and increasing awareness among organizations regarding the benefits of implementation of HR & payroll software are the factors fuelling the market growth in coming years.

Regional Outlook

What is the Growth Outlook for Payroll Outsourcing Services in North America?

Presence of a Leading Market Player in The Region to Drive the Market Growth

As per the analysis, North America is anticipated to dominate the market during the forecast period, among the U.S. is expected to make the most significant contribution to strengthening the market by exhibiting a CAGR of 5.7% from 2023 to 2033.

The high adoption of digital technology across all major verticals helps the market to grow in North America, particularly in the U.S. and Canada. Also, with the increasing adoption of cloud-based payroll software, vendors in the region are encouraging the transformation of payroll services by leveraging automated sub-processes, business analytics, big data, and the deployment of mobility and cloud delivery models to governments. With the advent of digital technologies, such cloud-based payroll software helps in executing payroll processes quickly, without any interruptions.

For instance, in November 2022, ADP announced enhancements to its award-winning Wisely® by ADP payment platform with advanced capabilities and innovative features like Earned Wage Access (EWA), designed for giving employees more control of their finances, and help employers better attract and retain talent.

What is the demand outlook for Payroll Outsourcing Services in Europe?

Increased application in end-use industries to drive the market growth

The payroll outsourcing services industry in Europe is expected to accumulate a market share of 21% in 2023. All major small and large enterprises in BFSI, Healthcare, Retail, Oil& Energy, Public Sector are moving toward the adoption of payroll outsourcing services in the business.

The key factor driving the payroll outsourcing services market in the Europe region is the presence of leading market players. The enterprises in the region have shown keen interest in implementing the payroll outsourcing solution and are investing in advanced and new technology on the large scale. Such factors will drive the growth of payroll outsourcing services in the coming years.

How do Growth Prospects for Payroll Outsourcing Services Appear in the Asian Market?

Technological Advancement in The Region Drive the Market Growth

The payroll outsourcing services market in the Asia Pacific is expected to account for 31% of the market share in 2023 and is expected to accelerate during the analysis period.

The growth of the market in the region is due to the increasing influence of automated sub-processes, business analytics, big data, and the deployment of cloud delivery models to the government. Most of the organizations in the region are relying on payroll outsourcing as it enables access to data on any device at any time. Organizations are also using these services to eliminate mistakes and increased accuracy and process automation.

In the Asian market, china is expected to expand at an exponential rate. The need for payroll outsourcing services is increasing as the number of global corporations and enterprises grows. In China, the economy is a powerful motivator for outsourcing with cost reduction and cost saving being the primary concerns. Increasing demand from BFSI, Healthcare, and Retail industries is likely to spur the market to considerable development over the forecast period

Category-wise Insights

By End-user Which Is the Most Prominent Segment in the Payroll Outsourcing Market?

Demand for the Services segment is high among other types

Based on the end user, the services segment is expected to dominate the market in the forecast period. The segment is projected to exhibit a CAGR of 23 % during the forecast period. The Services segment is expected to flourish owing to the increased accuracy of payroll outsourcing services when compared to in-house payroll management. Also, payroll outsourcing reduced the cost and risk involved in the business.

On the other hand, the manufacturing segment is projected to witness significant demand in the coming time. The growth can be attributed to the Increased business’s access to the latest technology and expertise to perform payroll functions well.

By Customer Which Segment Accounts for Highest Revenue in Payroll Outsourcing Services Market?

Small Size Companies Generating High Revenue

Based on customers the payroll outsourcing services market is segmented into small-size companies, mid-size companies, and large enterprises. Among all these the small-size company remains the top customer category expected to expand with a market share of 41% throughout the forecast period.

On the other hand, a market share of 37% is projected for the mid-size company segment by Fact.MR until 2033.

Start-Ups for Payroll Outsourcing Services Market

The start-ups in the payroll outsourcing services market are indulging in collaboration and continually making innovations in the procedures of payroll outsourcing services to further make it convenient and cost-effective for the population. Some key start-ups in the payroll outsourcing services market include – ePayslips, Hits Solution, payroll business solution, Topsy solution, and Precise Payroll among others.

• Founded in 2013 – ePayslips - Application for generating electronic payslips offers an application that generates electronic payslips for organizations irrespective of their payroll process- in-house or outsourced. The ePayslips portal is independent of payroll software. The standard output of the payroll software is converted into electronic payslips for employees that can be accessed by the employee from any device. It also provides payroll outsourcing services.
• Hits Solution - Offers a cloud-based HRMS & Payroll management solution. Features include employee database, organization structure, recruitment management (sourcing & AS), training management, performance management, time & attendance management, payroll management, compensation management, benefits management, analytics, and reporting. Also offers payroll outsourcing services for businesses.
• Payroll business solution provides payroll management software and services. The features include payroll processing, income tax, payroll disbursement, leave and attendance management, reimbursement management, arrears calculation, employee management, and report generation. Some of their clients are Detica, PFG, Pulse, and The Opera Group.
• Topsys Solutions offers cloud-based HRMS and payroll management software. Features include attendance management, leave management, recruitment management system, employee database, report, ing, and analytics. Also offers outsourced payroll processing services.
• Founded in 2014 - 247HRM is a cloud-based HRMS for SMBs. Features include employee database, tax compliance, leave management, attendance management, payroll management, performance management, schedule, ing, and recruitment management. Also offers payroll outsourcing services for businesses.
• Founded in 2009 - Precise Payroll is a provider of payroll solutions for small to mid-sized businesses. Precise payroll provides payroll outsourcing and software as well. The payroll-related offerings include time tracking, employee wage calculation, and tax management.

Competitive Landscape

Examples of some of the market participants in the global payroll outsourcing services market identified across the value chain include ADP, Gusto, Infosys Limited, International Business Machines Corporation, Intuit Quickbooks, Keka Inc., KPMG, OnPay, Papaya Global, Paychex, Sage Group plc, Square, SurePayroll, Vision H.R, Workday Inc., Zalaris ASA among others.

To achieve a substantial market share in the worldwide payroll outsourcing services market players are strengthening their position, pursuing expansion methods such as current developments, mergers and acquisitions, collaborations, and partnerships, joint ventures. Some of the development is as follows-

• In August 2022 - Sage, launched Sage People Payroll in the US and UK.
• In November 2021 -- ADP announced that it has acquired Integrated Design, Inc. (IDI).
• In October 2022: – KPMG in India & IBSFINtech announced an alliance relationship to offer their clients a holistic suite of corporate treasury automation solutions.
• In September 2022 - Paychex, Inc., announced the company’s SaaS-based HR software solution, a new conversational artificial intelligence (AI) feature called Paychex Voice Assist.

Key Segments Covered in the Payroll Outsourcing Services Industry Report

• By Customer Type:

  • Small Size Company
  • Mid-size Company
  • Large Enterprises

• By End-use Industry:

  • Services
  • Manufacturing
  • BFSI
  • Healthcare
  • Retail
  • Oil& Energy
  • Public Sector
  • Others

• By Region:

  • North America
  • Latin America
  • Europe
  • East Asia
  • South Asia and Oceania
  • Middle East & Africa