The Latin American business process outsourcing industry has enjoyed solid growth for a number of years. The payroll services sector has enjoyed exceptional growth recently, driven both by domestic growth and a number of large American and European companies setting up payroll operations or contracting with Latin American-based service providers. Mexico, Chile and Brazil have been leading the way in payroll services growth, with a flurry of partnerships, mergers and buyouts already in 2013.
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Recent Deals and Developments
Leading global services provider ADP announced on June 4th that they had purchased Payroll SA, a leading Latin American payroll services provider. Payroll SA is based in Santiago Chile, and also has significant operations in Brazil and Peru. Payroll offers clients full-service outsourcing, software-as-a-service or on-site deployments. Payroll S.A. has more than 1,300 clients and employs over 450 associates. ADP was already established Brazil with its in-country and multi-national solutions across Latin America based on its ADP Globalview® and ADP Streamline® offerings, but the purchase of Payroll SA allows the company to rapidly expand its footprint out of Brazil into Chile, Argentina, and Peru.
Implicit Solutions was one of the earlier players in the Latin American payroll services market. Implicit is a professional consulting companies with a broad international reach. They decided to expand into the Latin American services sector through a merger with ADAM Technologies, a well-established mid-tier payroll services company with operations in 23 countries, in 2006. The new company, Adams Technologies International, has grown rapidly through expanding a network of distributors to reach small and medium-size businesses as well as large corporate clients looking for multi-country payroll services. The distributor model has worked exceptionally well in Mexico, which has been one of the fastest growth areas for the company.
Meta4, a well-regarded, London-based human capital management company with over 1,300 clients, announced in April of this year that it was forming a strategic alliance with Toutatis Client Services do Brasil. Toutatis Client Services do Brasil has over 400 clients and 800 employees dedicated to providing clients with high-quality BPO services emphasizing payroll management. The new alliance will offer services through the Meta4 PeopleNet technology platform with outsourcing services provided by Toutatis. Meta4 already has a strong presence in Latin America, deriving almost a quarter of its 2012 gross income from clients in the area including Grupo Telefónica, Prosegur, Mapfre, Grupo Bimbo, Danone, Colgate and Kelloggs, and this strategic alliance with Toutatis keeps Meta4 positioned for further growth.
Multi-Country Payroll Outsourcing (MCPO)
Medium-sized and large enterprises have struggled with international payroll in the numerous countries where they have employees for a number of years. Human resources and payroll regulations vary significantly by country, and until the relatively recent development of multi-country payroll outsourcing services, businesses had been investing a good bit of time and talent to keep everything straight in processing their international payroll.
BPO providers identified the potential of MCPO in the late 1990s, but the ball didn't really get going until the first few years of the 21st century. The sector has been growing fast over the last decade, and analysts are projecting that the global MCPO market will top $1.3 billion by the end of 2014. Everest Group VP Rajesh Ranjan went on record calling Latin America “the next frontier” for MCPO, saying it was a natural fit given the complexity of payroll regulations in many Latin American countries.
