®

Multi-Country Payroll Outsourcing (MCPO) Annual Report 2019 –

Persistent Growth Amidst Evolving Propositions

Human Resources Outsourcing (HRO)

Annual Report – October 2018: Complimentary Abstract / Table of Contents

Copyright © 2018, Everest Global, Inc.

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Table of contents (page 1 of 2)

Topic Page no.

Introduction and overview 5

Summary of key messages 10

Section I: Market overview and key regional trends 13

⚫ Summary 14
⚫ Global MCPO market growth 15
⚫ MCPO market key drivers 16
⚫ MCPO market analysis of specific regions 17
⚫ MCPO Buyer perspective 18
– Drivers for adoption 18
– Service provider performance 20

Section II: Buyer adoption trends 22

⚫ Summary 23
⚫ MCPO adoption trends analyses dimensions 24
⚫ MCPO adoption by buyer headquarter location 25
⚫ MCPO adoption by geographic scope 26
⚫ MCPO adoption by buyer size 27
⚫ MCPO adoption by industry adoption 28
⚫ MCPO adoption by process scope 29

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Table of contents (page 2 of 2)

Topic Page no.

Section III: Solution characteristics 30

⚫ Summary 31
⚫ Analyses dimensions 32
– MCPO deal size and length 33
– Delivery footprint 34
– Pricing model 35
– Technology model 36
– Add-on technology solutions 37

Section IV: Service provider landscape 41

⚫ Summary 42
⚫ Service provider market share 43
⚫ Service provider share distribution by active deals 44
⚫ Top Service providers across major geographies by revenue 45
⚫ Service provider share distribution by country coverage & buyer size 46

Appendix 47
⚫ Operating/technology frameworks in MCPO 48
⚫ Glossary of key terms 52
⚫ Research calendar 54
⚫ References 55

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Everest Group’s MCPO research is based on multiple sources
of proprietary information

⚫ Everest Group’s proprietary database of over 1,000 MCPO deals Service providers covered in detail in the analyses1
⚫ The database tracks the following elements of each MCPO deal:
– Buyer details: Industry and location including facilities and headquarters
– Deal details: Including TCV, ACV, term, start date, buyer employees served,
pay-slips processed, and the primary pricing structure
– Scope: Process coverage and geographic coverage (in terms of number of
countries covered within each region)
– Technology ownership and maintenance
– Global sourcing

⚫ Everest Group’s proprietary database of operational capability of over 15 MCPO

service providers
⚫ The database tracks the following capability elements for each service provider:
– Major MCPO clients and recent wins
– Overall MCPO revenue, total clients, pay-slips processed, and buyer employees
served
– Geographic coverage by employees and split of clients by industry, number of
countries, and employee-size coverage
– MCPO service suite, delivery locations, and level of offshoring
– Technology offerings within MCPO
– Overall country coverage and partnerships

1 Assessment for activpayroll, Elanor, PaySpace, and SD Worx excludes service provider inputs on this particular study and is based on Everest Group’s estimates, which
leverage Everest Group’s proprietary Transaction Intelligence (TI) database, ongoing coverage, the service provider’s public disclosures, and interaction with buyers
Confidentiality: Everest Group takes its confidentiality pledge very seriously. Any contract-specific information collected, is presented back to the industry in an aggregated fashion

® Copyright © 2018, Everest Global, Inc.

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Everest Group’s MCPO research is based on multiple sources
of proprietary information

Buyer surveys and interactions

Global surveys and one-on-one executive-level interviews of buyers are undertaken to understand how organizations perceive the
performance of their MCPO provider. The surveys/interviews focus on different aspects of an outsourcing relationship including:
⚫ Key drivers for outsourcing multi-country payroll
⚫ Contract details (including process scope, signing year, and duration)
⚫ Overall performance of the service provider including key strengths and improvement areas
⚫ Detailed assessment of service provider performance across elements such as:
– Key payroll performance metrics
– Payroll subprocesses
– Implementation and transition phases
– Governance and relationship management

The analyses in this report are presented at two levels:

⚫ Overall market analysis that highlights the complete market composition/dynamics
⚫ The current market trends based on deal activities in the last three years
The sample size varies for different analyses based on the availability of deal details

The scope of this report includes:

⚫ Deals where “payroll calculation (gross-to-net)” has been necessarily outsourced
⚫ Deals that have at least two countries in scope
⚫ All industries and geographies

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Overview and abbreviated summary of key messages (page 1 of 2)

This report provides a comprehensive coverage of the 2018 global Multi-Country Payroll Outsourcing market and analyzes it
across various dimensions such as market overview and key market trends, buyer adoption and solution trends, and service
provider landscape. It also identifies the key implications of the research findings for buyers and service providers.

Some of the findings in this report, among others, are:

⚫ The MCPO market grew rapidly at a rate of ~20% from 2016 to 2017
Market overview ⚫ With growing awareness of the MCPO value proposition and increasing provider maturity, this
momentum is likely to continue for the next couple of years
⚫ Europe emerges as the dominant market in terms of revenue. The North American and Asia
Pacific markets closely follow suit. The North American market, owing to its high maturity, has
witnessed a slump in its growth rate, while Europe and Asia Pacific have witnessed very strong
growth. Other regions of Latin America and Middle East also witnessed very strong growth,
albeit from a smaller base
⚫ Although service providers have performed well with respect to the traditional drivers of cost
reduction, process standardization, and compliance, buyers expect more in terms of next-
generation technologies and strategic support

⚫ Buyers headquartered in North America and Europe, the two most mature markets, are the
Buyer adoption
leading adopters of MCPO globally. Rising adoption is seen from the emerging markets of Asia
trends
Pacific and Latin America
⚫ The market has witnessed strong adoption by small-sized MNCs, which are spread across two
to five countries. The large market segment has also witnessed a resurgence of activity, with
many large enterprises venturing into large multi-continent deals

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Overview and abbreviated summary of key messages (page 2 of 2)

⚫ The small market segment witnessed a dip in the average deal size, while the mid- to large-
Solution
sized segments witnessed a significant rise due to the increase in large multi-country deals
characteristics
⚫ Offshoring continues to be adopted aggressively. India continued to be the most popular
offshore location, though other locations in Eastern Europe and Latin America are also rapidly
gaining traction
⚫ Due to the greater flexibility offered by country-specific pricing mechanisms, it continues to be
the dominant model; the other two (uniform-blended pricing and differentiated-regional pricing)
models have become increasingly rare
⚫ Analytics, automation, and enhancing user/employee experience are the key focus areas among
providers

⚫ ADP, followed by NGA HR and TMF Group, dominates the MCPO market in terms of market
Service provider
revenue. The three companies cumulatively constitute over 50% of the total market revenue
landscape
⚫ TMF Group is the most dominant player in terms of number of active deals, as they have
numerous small deals which skew the market share in their favor. However, while considering
deals with a greater number of countries, ADP and NGA HR emerge as strong contenders
⚫ The market share scenario changes by the complexity and/or the size of deals (in terms of
number of countries involved / employees covered)

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This study offers four distinct chapters providing a deep dive into
key aspects of MCPO market; below are four charts to illustrate the
depth of the report

Market size and growth Buyer adoption trends are analyzed across five dimensions
Market size of the MCPO market Buyer adoption trends
US$ billion X% CAGR

5
1

2.95-3.05
Process
3 scope
Buyer headquarter
1.75-1.85 region 4
1.55-1.65 2

Buyer
size
Industry
Geographic scope
2016 2017 2020E scope

Degree of offshoring Market share by number of current deals

Extent of leverage of offshore/nearshore Shoring mix of the MCPO market Technology model adoption
locations Number of service provider FTEs Number of active deals
Number of new deals

Deals with no 100% = 7,000-7,500 Integrated hybrid solution 43% 44%

28%
offshore component

Onshore 25-30%
Deals with offshore / Single-platform solution 38% 38%
72%
nearshore component
70-75%
Offshore /
nearshore Pure aggregated solution 19% 16%
2017 2016 2017

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Research calendar – Human Resources Outsourcing (HRO)

Published Planned Current release

Flagship HRO reports Release date

Multi-Process Human Resources Outsourcing (MPHRO) – Buyer Satisfaction Report 2018 March 2018
Heath and Welfare (H&W) Benefits Administration Outsourcing – Service Provider Landscape with PEAK Matrix™ Assessment 2018 March 2018
SuccessFactors-Based Human Resources Business Process Services (HR BPS) – Service Provider Landscape
with Services PEAK Matrix™ Assessment 2018 June 2018
Heath and Welfare (H&W) Benefits Administration Outsourcing – Market Report 2018 June 2018
Heath and Welfare (H&W) Benefits Administration Outsourcing – Service Provider Profile Compendium 2018 June 2018
Multi-Country Payroll Outsourcing (MCPO) – Service Provider Landscape with PEAK Matrix™ Assessment 2018 September 2018
Multi-Country Payroll Outsourcing (MCPO) Annual Report 2019 – Persistent Growth Amidst Evolving Propositions October 2018
Multi-Country Payroll Outsourcing (MCPO) – Service Provider Profile Compendium 2019 Q4 2018
Multi-Country Payroll Platform (MCPP) – Service Provider Landscape with PEAK Matrix™ Assessment 2019 Q4 2018

Thematic HRO reports

The Impact of Technology on HR GICs – A Call to Action January 2017
Aon Goes Back to its Roots; the (Re-) Birth of an HR Outsourcing Specialist March 2017
Payroll Outsourcing in Asia Pacific: Climbing Up the Maturity Ladder March 2017
Long-Tail HR Operations: Key Challenges and How to Overcome Them March 2017
The Future of HR Services – An Employee-Centric, Digital-First Approach September 2017

Note: For a list of all of our published HRO reports, please refer to our website page

® Copyright © 2018, Everest Global, Inc.

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Additional HRO research recommendations

The following documents are recommended for additional insight into the topic covered in this report. The recommended documents
provide either additional details on the topic or complementary content that may be of interest:

1. Heath and Welfare (H&W) Benefits Administration Outsourcing – Service Provider Landscape with PEAK Matrix™ Assessment 2018
(EGR-2018-24-R-2678); 2018. This report examines the dynamics of the global H&W BAO service provider landscape and its impact on the
H&W BAO market. Based on the comprehensive Everest Group PEAK Matrix, each of the 11 H&W BAO service providers are segmented into
Leaders, Major Contenders, and Aspirants. The report presents some key findings on the performance of different service provider categories.
Additionally, it provides insights into the strengths and areas of improvements of each service provider.

2. SuccessFactors-Based Human Resources Business Process Services (HR BPS) – Service Provider Landscape with
Services PEAK Matrix™ Assessment 2018 (EGR-2018-24-R-2675); 2018. This research provides comprehensive coverage of the 2017
SuccessFactors-based HR BPS market and analyzes it across various dimensions such as market overview, buyer adoption trends, solution
trends, and service provider landscape. Based on the comprehensive Everest Group PEAK Matrix assessment, in this report 11 service
providers are segmented into Leaders, Major Contenders, and Aspirants. Additionally, this report also contains Everest Group’s remarks on
each of the 11 service providers’ strengths and areas of improvement.

3. Heath and Welfare (H&W) Benefits Administration Outsourcing Market Report 2018 - Unlocking Value Through Improved Employee
Experience (EGR-2018-24-R-2719); 2018. Health and Welfare Benefits Administration Outsourcing (H&W BAO) is one of the most
compliance-driven markets in the HRO space. This research report provides a comprehensive coverage of the 2017 H&W BAO market and
analyzes it across various dimensions such as market overview, buyer adoption trends, solution & transaction trends, and
service provider landscape.

For more information on this and other research published by Everest Group, please contact us:
Anil Vijayan, Practice Director: [email protected]
Amitesh Rawat, Senior Analyst: [email protected]
Priyanka Mitra, Senior Analyst: [email protected]

Website: www.everestgrp.com | Phone: +1-214-451-3000 | Email: [email protected]

® Copyright © 2018, Everest Global, Inc.

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 About Everest Group

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