Human Capital Management (HCM) challenges in the expansion process
For any entrepreneur, the prospect of expanding overseas, tapping into new markets and increasing profits is truly exciting. In addition to establishing the right company structure, gaining a comprehensive understanding of local laws and regulations governing the target markets is critical to the success of any multinational.
Expansion goes hand in hand with a growth in staff, catalysed by a need for quality Payroll and Human Resources Management. These requirements are country specific given that employment and labour laws vary widely based on country.
For instance, in Mauritius, as stipulated by the Employment Rights Act 2008; every full-time worker who remains in continuous employment with the same employer for a period of 12 consecutive months shall be entitled, during each subsequent period of 12 months while he remains in the continuous employment, to 15 working days’ sick leave on full pay, whereas in France, there is no such legal provision except for special Collective Bargaining Agreements provisions.
Legislation around the globe is increasingly becoming more complex and fragmented. Governments are leading this shift by implementing more aggressive methods of payroll and income tax collection using technological advancement as a lever. An obvious example of this is the implementation of the Tax at Source system (P.A.Y.E.), effective as from January 2019 in France.
Gradually, countries are striving for greater regulatory transparency of personal data collection and data privacy protection. As demonstrated by the implementation of the General Data Protection Regulation (G.D.P.R.) for all EU citizens.
Therefore, anyone seeking to expand its global footprint in the search for new revenue streams needs to strongly consider Payroll and HR implications.
Moving from a Single Country operation to a Global Payroll model
In the journey towards global expansion, some organizations will take a very pragmatic but uncoordinated approach to address HCM issues. This typically involved dealing with the payroll aspects of global expansion on a country by country basis, thus resulting in:
- Increased operational costs and inefficiencies,
- Ineffective internal reporting,
- Governance and compliance issues,
- Lack of standardization,
- Combinations of service providers, software vendors and in-house teams offering a service that varies in quality from country to country…
Adopting a multi-country payroll strategy is the ultimate antidote to these problems.
Indeed, an organization with employees based in a single country commonly centralizes the payroll function, either with a dedicated in-house team, shared service centre or via an outsourced provider, in order to take advantage of the benefits that a single and focused payroll structure can offer. This same principle can be effectively applied to organizations evolving on an international scale with workforces in several countries.
The complexity of international payroll can make companies question the decision to enter foreign markets. They are challenged with staying on top of fast-changing local regulations. Adding to this one needs more control and visibility of multiple subsidiairies in order to minimize people-related costs and protect the company’s most sensitive information, i.e. Personal Data. And the more global it becomes, the greater the need for compliance and standardization across jurisdictions.
In this context, the move to Global Payroll can prove to be invaluable.
Mauritius as a Global Human Capital Management Centre for multinationals
The reputation of Mauritius as an International Financial Centre is well established and rests mainly on the quality of its services, infrastructure, modern and innovative legal framework, friendly business environment and its pool of highly qualified and bilingual professionals.
The story of Mauritius does not end here. Our island has established itself as an emerging business process outsourcing destination for both financial and non-financial activities.
Among these, Human Capital Management is expanding due to well-known high-quality vendors like Rogers Capital. Indeed, the international exposure of our island, local corporates, and workforce have been instrumental in developing local capabilities to offer Multi-Payroll Outsourcing services to multinationals.
Technology has also served as a key enabler given our high levels of connectivity and the move to cloud-based platforms.
It is therefore not uncommon nowadays to find multinationals using the Mauritian HCM platform capabilities for their global expansion into Africa or Asia. They have set up locally in Mauritius through in-house global payroll centres or they have outsourced to local HCM service providers – the management of their entire group workforce.
Even French Payroll and HR services are provided locally from Mauritius. As you may know, France is the most complex country worldwide to run payroll but this has not prevented local HCM services vendors from providing, their expertise to France-based headquarters.
The multi-country payroll provider is capable of servicing multiple clients at once, based in different jurisdictions, sometimes even on the same platform. Therefore, they are more likely to have optimized technical and human resources that multinationals can benefit from.
As a result, accessing in-country HCM expertise from a Single Point Of Contact (SPOC) based in Mauritius undoubtedly helps multinationals to seamlessly set up their operations in multiple countries and focus on their core business. The benefits of this are real and tangible:
- A lower and flexible total cost of ownership
- More consistency in processes, remunerations and benefits across countries
- Improvement in business intelligence data
- Gain of Peace of mind (Outsourcing as in insurance)
- Improved Global governance with global Sla’s and Kpi’s …
Mauritius is engaged in a Transformative Journey to attain the status of an Inclusive High-Income country based on innovation and sustainable value-creation. Moreover, with our strategic geographic location between Asia and Africa, our island has strengthened its position as a preferred investment gateway to Africa.
Assuredly, the development of Multi-Country Human Capital Management Outsourcing services and skills on our island is a valuable asset that benefits companies and entrepreneurs on their path to global expansion, thus allowing our economy to achieve its strategic goals.