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How payroll outsourcing is on the rise in the Middle East

Posted on 26/02/2023
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Recent years have seen the expansion of payroll functions from accounting to stand-alone departments of experienced payroll experts. The payroll outsourcing industry has become integral to organisations expanding into and scaling within the Middle East.

 

In this article, we will look at the current job market and payroll outsourcing trends to show you why more and more businesses are choosing this option.

What’s happening in the Middle East job market

Globally a third of the world’s economies are experiencing the onset of a recession, but while GDP is predicted to slow for the Middle East to 3.5% in 2023, there are indications that the region will continue to thrive.

 

In 2022 World Bank economists stated that the Middle East and North Africa (MENA) region grew by 5.5%, the fastest rate since 2016. Whilst the oil industry made a big impact on these figures, other industries also saw opportunities arise from new public policy. Saudi Arabia is just one region that is looking to expand its growth through a transformational “2030 vision” that opens its doors to growth contributions from internal and external enterprises.

 

“The Middle East will become one of the fastest growing markets in the world, over the next decade,” says mselect’s founder Hal Miran. “This means more companies expanding into the region and lots more local startups, in turn opening more jobs and raising economic growth. It also means that outsourced business functions, like payroll, will be in higher demand.”

Payroll outsourcing trends in the Middle East (2023 and beyond)

Payroll has changed the world over, in the Middle East in particular the switch to cloud accounting and increased employee outsourcing activities (including employment from overseas) has added new levels of complexity. Add to this the taxation differences from region to region in the Middle East and organisations are often presented with a potential barrier to entry.

 

Wellness activities are also affecting payroll functions, as improving employee experiences leads to enhanced HR systems. This means building out self-service elements within payroll cloud systems that allow for easy access, file sharing and communication.

 

On top of all of these trends, employers are now providing more flexibility with remote and hybrid roles. There is also an increased rise in outsourcing employment as well. All of which makes payroll an independent department requirement.

 

“Payroll has had to catch up by creating new structures and systems for pay to reflect our new way of working and flexibility in pay frequencies,” says Miran. “For many organisations, it has been important to seek payroll outsource services to fulfil this previously in-house accounting function. Giving them flexibility and expertise on payroll matters, and creating performance and cost efficiencies that work with them as they grow.”

Why companies are choosing payroll outsourcing vs in-house payroll departments

As late as one decade ago large portions of the workforce were still being paid in cash, this was complicated and unregulated. When the Wage Protection Scheme (WPS) came into force wages had to be paid to banks. Meaning finance departments were now responsible for timely payroll transfers, involving them in more accounting functions than ever before.

 

On top of this workers from overseas had increasingly complicated payroll criteria, with extra allowances, pensions, currency calculations and options, plus visa requirements. This made payroll a very difficult job because it needed to be personalised from employee to employee.

 

WPS was the point at which payroll effectively became an independent function needed within organisations and the last decade has rolled out further changes at pace.

 

This is where payroll outsourcing companies grew from, because they could offer flexible packages to businesses that would give them access to a payroll function already way ahead of where internal departments found themselves. Their skills further complement global clients who are looking to expand into the Middle East.

How does outsourcing payroll work?

Outsourcing your payroll to us here at mselect is quick and easy. Once we have received employee data our comprehensive system quickly steps into action, providing you with

●       employee setup, record keeping and access

●       payroll processing

●       new hire reporting

●       payment method setup including frequency and currency differences

●       tax withholding and remittance

●       wage garnishment or enhancements

●       wage adjustments and reductions

●       end-of-year tax forms and declarations

●       payroll real-time reporting to accounts and management teams

 

On top of this we can provide full recruitment services, sourcing manpower, HR consultancy and many other business process outsourcing (BPO) activities.

What are the real payroll outsourcing benefits?

Whilst handling the functions of payroll demands, payroll outsourcing also works to benefit your organisation in several ways.

 

  1. It saves you time and money

  2. It gives you access to fast, accurate and tested systems

  3. It works for both industry and country compliance

  4. It gives you a better alignment with HR

  5. It gives you improved data protection

  6. It gives employees autonomy

  7. It reduces human or system error

  8. It gives you access to leading resources

  9. It reduces training costs

  10. It increases organisational flexibility

  11. You can prioritise your core business

  12. It gives you a faster reaction in unprecedented situations

 

Looking for reliable payroll outsourcing services in the Middle East?

Payroll outsourcing services are very much here to stay and in the Middle East, outsourced services are paving the way for rapid, but sustainable growth and expansion of global brands and local startups.

 

Finding the right partner for your business in this matter is key.

 

We are mselect, a recruitment, HR and payroll outsourcing specialist with offices in Saudi Arabia, Iraq, Jordan, Lebanon and the United Kingdom. We work with smaller companies and global brands like Exxon Mobil, Visa, Samsung and Unicef to deliver the right candidates at the right time, for the right role - and most importantly, paying them the right wages on time.

 

If you are looking for help outsourcing payroll functions across the energy, telecoms, retail, industrial, healthcare, FMCG and education sectors - Contact us today!