Business Benefits of Consolidation
Multinational organisations often consolidate HR services with a single regional service provider. This helps reduce complexity and cost. Detailed benefits of this multinational approach include –
Eliminating duplication of cost of procuring vendors
- Sourcing vendors
- Onboarding vendors
Eliminating duplication of cost of managing vendors
- Multiple HR vendor compliance management (annual renewals etc)
- Different SLA’s for each vendor
- Differing escalation processes for each vendor
- Cost of duplicating integration for each vendor
Eliminating duplication of effort by vendors (cost of which is ultimately passed to the customer)
- Duplicating reports by multiple vendors
- Duplicating interfaces by multiple vendors
- Difficult to prepare ad-hoc reports across multiple countries
Centralized vs Local Billing
For cheapest price and maximum convenience and consistency, we recommend centralised implementation and billing. Please consider the following –
- Vendor’s costs are less so they can charge less
- You can demand a lower price from the vendor.
- Buyer advises the country for the contract and billing
- Vendor will quote including VAT/GST for that country
- Vendor invoices from their company in that country
- Customer pays VAT/GST on that amount
- Customer does internal cost allocations
Decentralised (Local) Billing
- With local billing, the projects often end up being implemented separately. This increases cost and reduces consistency between countries
- If buyer needs a contract and billing for each country (and maybe per company) separately the vendor has to break down their price and apply local VAT for each country (more work)
- There is normally a master contract that provides a template for the local contracts
- There will also be a contract for each country so the vendor can bill them
- There ends up being a lot of contracts
- There are potential issues when selling into countries with withholding tax
Can we Help?
Humanica and Data On have been providing regional HR services for SE Asia since 2003. We have customers in the Philippines, Singapore, Indonesia, Malaysia, Thailand, Brunei, Vietnam the Middle East, Australia, Lao PDR, Maldives, Cambodia, Korea, Japan and elsewhere.
If consolidating your HR service providers would improve your organisation, I’d be delighted to assist with your planning. Feel free to reach out to me, Matthew Pearson, by email at firstname.lastname@example.org or by phone/WhatsApp/Facetime at +66 820 950 880.