Issue link: http://www.e-digitaleditions.com/i/94708
Regional Report Not all of the above is consistent on a country-by-country basis. In Denmark, where biotech company Novozymes is headquartered, some functions like pensions are routinely outsourced, while others like payroll largely remain an in-house function, according to Michael Almer, global head of people and organisation at the Copenhagen-based company. "We have a small payroll department here that can easily handle the task," he explains of his company's decision not to outsource payroll administration. "There just doesn't appear to be a return on investing in outsourcing this, although we are actively looking into possibly outsourcing recruitment and talent management." There are also different practices and views with regard to outsourcing, depending on where a company resides, NorthgateArinso's research indicates. In Finland, for instance, an organisation's IT department generally has a stronger role in deciding on the HRO budget and systems development than what is experienced in other countries. In Sweden, on the other hand, a country that is home to the headquarters of many large companies, there is more exposure to and thus experience with outsourcing HR functions. And in Finland, there appears to be more ongoing HRO application and integration projects than in other countries, due to a "tendency for companies to keep HR processes in-house," Langlois explains. Despite the still-significant presence of HRO across the Nordic countries, interested buyers confront many of the same impediments (and some atypical ones) that prospective buyers generally encounter in Western Europe and the United States. Chief among these is the incompatibility of a company's internal processes and software with potential vendors. Defining the scope and responsibilities of HRO is another challenge, with 41 per cent of the NorthgateArinso/Marketvisio survey respondents citing it as an issue, followed next by concerns over information security. Regulatory complexity is another issue potentially slowing the use of outsourcing in the region, though the same can be said for most other countries in Western Europe and the U.S. "There are no direct regulatory issues limiting outsourcing in the Nordic region," Karppinen says, but he quickly notes that as members of the European Union, the Nordics must address such payroll- related demands as the EU's Data Privacy Protection Directive and the European Data Privacy Law, each stipulating how and where employee personal information can be used and stored. A particular regulatory challenge related to payroll administration outsourcing is rather complex local payroll requirements. Sweden and Finland, for instance, have amassed and require compliance with nearly 200 collective agreements dictating how payroll must be calculated. These agreements are adapted to the type of company operating in the countries, which company payroll operations (and those of service providers) must then support. "They're compulsory, so compliance is not optional," Karppinen says. Langlois also commented on the differences in payroll laws and regulations throughout the Nordics. "As companies expand internationally, they are challenged to find new and reliable ways to administer and pay their workforce in each country where they conduct business," she says. Karppinen succinctly summed up the situation, commenting that the role of local requirements in payroll "will be the greatest influence on how payroll is performed, and this will have a bigger impact than any direct regulatory issues." The Global Element Like multinational companies elsewhere across the planet, an organisation's global presence is a key driver compelling companies to outsource HR. "As companies expand internationally," Langlois says, "they are challenged to find new and reliable ways to administer and pay their workforce in each country where they conduct business." This global footprint insists that providers share a similar geographic breadth and scope with Nordic companies. Many do, and Langlois noted that current global companies working with NorthgateArinso in the region include AstraZeneca, Cadbury, Baker Hughes, Solvay, and Unilever. HRO penetration seems to be relatively the same across industries, and regardless of a company's size, particularly with regard to payroll administration. Karppinen notes that small companies for decades have used accounting bureaus and service providers like Aditro for payroll services, as have midmarket companies and large companies, which also rely on shared service centres (SSCs). [34] HRO TODAY GLOBAL | FALL 2012