[00:00:09] [SPEAKER_08]: Welcome everyone to another episode of HR amp, Payroll 2.0, I'm Pete Tillie Ocus and as always I'm
[00:00:14] [SPEAKER_08]: joined by the legendary Julie Fernandez.
[00:00:17] [SPEAKER_08]: Welcome Julie.
[00:00:18] [SPEAKER_04]: Thanks Pete, great to be here again.
[00:00:19] [SPEAKER_04]: I know we're sticking a couple up for our travel time here.
[00:00:23] [SPEAKER_08]: Yeah.
[00:00:24] [SPEAKER_04]: Let's go, let's roll.
[00:00:26] [SPEAKER_08]: That's right, we have been a rush with content, right?
[00:00:28] [SPEAKER_08]: A rush with yes and I am so excited for this one.
[00:00:31] [SPEAKER_08]: This is what we've been working on for a while.
[00:00:33] [SPEAKER_08]: We got a chance to talk on the source with daily pay over at PayCon and I'm so excited to
[00:00:38] [SPEAKER_08]: have this guest today, Mr. Jerome Gouvernel, the co-founder and CEO of Data Scale HR, I'm so
[00:00:44] [SPEAKER_08]: excited to see you here.
[00:00:45] [SPEAKER_08]: Welcome Jerome.
[00:00:47] [SPEAKER_01]: Pete, it's great to be with you again.
[00:00:49] [SPEAKER_01]: Thanks for having me really appreciate it and Julie is great to be with you.
[00:00:53] [SPEAKER_04]: Thanks, same here.
[00:00:54] [SPEAKER_04]: We're excited.
[00:00:55] [SPEAKER_04]: We got lots to talk about today.
[00:00:57] [SPEAKER_08]: I know, Jerome, look, I'm so excited to get into this with you.
[00:01:00] [SPEAKER_08]: I want to talk integrations.
[00:01:02] [SPEAKER_08]: I want to talk, Jenny, I want to talk global payroll.
[00:01:06] [SPEAKER_08]: But first we ask every guest.
[00:01:08] [SPEAKER_04]: Oh, Pete, let me ask.
[00:01:08] [SPEAKER_04]: You go ahead.
[00:01:10] [SPEAKER_04]: Do it.
[00:01:11] [SPEAKER_04]: Do it.
[00:01:12] [SPEAKER_04]: Okay, Jerome, we ask everyone and we love to hear how you got into, where did you get your
[00:01:17] [SPEAKER_04]: start in the HR and our payroll?
[00:01:19] [SPEAKER_04]: And then why on earth do you stay?
[00:01:21] [SPEAKER_01]: It's my only skill.
[00:01:23] [SPEAKER_01]: No, I hope for you.
[00:01:24] [SPEAKER_01]: But I think I got a mass-todd like everybody else by mistake.
[00:01:29] [SPEAKER_01]: I'm an IT guy originally.
[00:01:30] [SPEAKER_01]: I used to be a coder and I landed some job, it was a security company.
[00:01:36] [SPEAKER_01]: They lost their payroll administrator and they asked me, do you think, well, you
[00:01:41] [SPEAKER_01]: know computers?
[00:01:42] [SPEAKER_01]: So do you think you could work the payroll system for us?
[00:01:47] [SPEAKER_01]: I think I was 21 years old or something.
[00:01:51] [SPEAKER_01]: That's literally how I started cutting tracks and paying people.
[00:01:57] [SPEAKER_01]: And I absolutely hated it.
[00:02:00] [SPEAKER_01]: Running payroll is a really difficult job as you guys know.
[00:02:04] [SPEAKER_01]: So, but I really enjoyed the challenge of it.
[00:02:09] [SPEAKER_01]: And on the back of that I got a really cool job about it was about integrating an
[00:02:14] [SPEAKER_01]: AES 400s and old IBM system that nobody could connect with building a front end for
[00:02:22] [SPEAKER_01]: that an HR front end.
[00:02:24] [SPEAKER_01]: There was for a construction company and then connecting the payroll engine into that.
[00:02:29] [SPEAKER_01]: So way back then I was already doing connectivity and data transformation and APIs
[00:02:37] [SPEAKER_01]: and all that kind of stuff.
[00:02:39] [SPEAKER_08]: Was that mainframe type systems?
[00:02:42] [SPEAKER_01]: It was an IBM AES 400 loaded in RPG, it was terrible, it was horrible.
[00:02:49] [SPEAKER_04]: So you said a few types of, it was awful, I hated it but you must like something is
[00:02:55] [SPEAKER_04]: changed right?
[00:02:56] [SPEAKER_04]: You have to fund some anger that you just absolutely love about this.
[00:03:01] [SPEAKER_01]: I love the fact that it's so difficult, I love how it is and I love the fact that it
[00:03:07] [SPEAKER_01]: hides its complexity, I love the fact that you would think that it's easy and it's
[00:03:15] [SPEAKER_01]: And I also like the cultural aspect to payroll and it's going to sound weird because
[00:03:22] [SPEAKER_01]: I've been doing payroll in various regions of the world over my lifetime and then when we
[00:03:28] [SPEAKER_01]: were doing global view at ADP, we were doing like 45 countries, you realize that a lot
[00:03:35] [SPEAKER_01]: of the payroll rules and the way you think about paying people is deeply tied into the
[00:03:41] [SPEAKER_01]: culture of the country and tax systems, tax tables even reflect the culture of the country.
[00:03:48] [SPEAKER_01]: But I just find that fascinating.
[00:03:49] [SPEAKER_08]: It is, it is.
[00:03:51] [SPEAKER_08]: Yeah, that's what always kept me in payroll right?
[00:03:53] [SPEAKER_08]: Well, not kept me in payroll but drew me to it.
[00:03:55] [SPEAKER_08]: I think initially was just that challenge, right?
[00:03:58] [SPEAKER_08]: It's like it is so complicated and it's not the same, it's the same but it's not.
[00:04:04] [SPEAKER_08]: When you go company to company and country to country all of those things are just
[00:04:08] [SPEAKER_08]: so many variables.
[00:04:09] [SPEAKER_04]: But when it doesn't stop changing, right?
[00:04:11] [SPEAKER_04]: It does.
[00:04:12] [SPEAKER_04]: You're never, it's the master of never.
[00:04:15] [SPEAKER_04]: The master you have never with payroll because it's just moving.
[00:04:18] [SPEAKER_01]: You're putting a finger on one of the thesis, the founding thesis of data scale actually.
[00:04:24] [SPEAKER_01]: This idea that it's never ending and when we talk about data integration and the ability
[00:04:33] [SPEAKER_01]: to consume data from a trans system sources or feeding it into a payroll engine or whatever,
[00:04:40] [SPEAKER_01]: all of those integrations change over time.
[00:04:44] [SPEAKER_01]: And if that's one thing we know for certain is that they're going to keep changing.
[00:04:49] [SPEAKER_01]: And that's being my opinion, one of the biggest hurt or an stumbling block for new
[00:04:55] [SPEAKER_01]: entrances in the industry.
[00:04:57] [SPEAKER_01]: A lot of, I see a lot of folks from the FinTech industry who decided to give payroll
[00:05:04] [SPEAKER_01]: you know, a try and unlike FinTech and a lot of other industries where it's also
[00:05:14] [SPEAKER_01]: of tends to remain fairly constant over time, you know, when you transfer money from one bank
[00:05:20] [SPEAKER_01]: to another, those standards don't change three times a year.
[00:05:25] [SPEAKER_01]: They tend to change every couple of years or maybe every 10 years and in our world
[00:05:30] [SPEAKER_01]: things like APIs don't really solve the problem because APIs tend to be fixed interfaces
[00:05:40] [SPEAKER_01]: and we live in a dynamic payroll world.
[00:05:43] [SPEAKER_04]: Oh, I can't wait to dig into that more because you know, APIs are kind of the talk of
[00:05:48] [SPEAKER_04]: the town these days as a substitute for SFTP is another flat file transfers and yet
[00:05:55] [SPEAKER_04]: you're raising in incredibly important point which is there's a staticness about that
[00:06:01] [SPEAKER_04]: as well that you really have to be thinking about.
[00:06:04] [SPEAKER_08]: Yeah, Jerome, you know, we were one of the things I wanted to talk about while you're
[00:06:07] [SPEAKER_08]: here was you've had some great, you have a lot of great posts on LinkedIn but one of the ones
[00:06:12] [SPEAKER_08]: that thought was really interesting was your analogy to global payroll being somewhat like
[00:06:17] [SPEAKER_08]: food and delivering food to everyone, right?
[00:06:20] [SPEAKER_08]: Like talk about that because I think that's a great place to start with this challenge
[00:06:24] [SPEAKER_08]: of what we're facing when it comes to global payroll trying to solve for global payroll.
[00:06:29] [SPEAKER_01]: Yes, my favorite analogy or metaphor, never show, cooking, I love cooking so everything
[00:06:36] [SPEAKER_01]: looks like a kitchen to me.
[00:06:39] [SPEAKER_01]: Yeah, I think somebody made the comment that what's stopping anyone from building a global
[00:06:48] [SPEAKER_01]: payroll engine, like it's that familiar rant, somebody should just build a global payroll
[00:06:54] [SPEAKER_01]: engine, right?
[00:06:56] [SPEAKER_01]: And to me, I thought okay, so payroll is different in every country but how different
[00:07:02] [SPEAKER_01]: is it really?
[00:07:03] [SPEAKER_01]: And then I thought about food and I thought, well, everybody needs to eat.
[00:07:08] [SPEAKER_01]: So you could argue that you could just build a single kitchen and feed everybody and I think
[00:07:13] [SPEAKER_01]: technically that is correct, you can and some of us have actually done that, right?
[00:07:20] [SPEAKER_01]: But does that mean that everybody will like the same food?
[00:07:24] [SPEAKER_01]: Does that mean that you will be successful in every region that you enter by providing
[00:07:29] [SPEAKER_01]: the same menu to everyone and clearly answer is no, even if you take the most standardized
[00:07:34] [SPEAKER_01]: restaurant in the world McDonald's.
[00:07:38] [SPEAKER_01]: If any of you guys have ever tried to McDonald outside of the US, you'll know it is very
[00:07:42] [SPEAKER_01]: different.
[00:07:42] [SPEAKER_01]: It tastes very different, the menus different.
[00:07:45] [SPEAKER_01]: In fact, it's almost unrecognizable except for a few menu items.
[00:07:51] [SPEAKER_01]: And it occurred to me that there's a lot of things you can standardize by payroll for sure
[00:07:55] [SPEAKER_01]: and that makes sense to standardize.
[00:07:58] [SPEAKER_01]: But ultimately what makes a successful payroll service in a country is its ability to get
[00:08:06] [SPEAKER_01]: it done according to local rules.
[00:08:09] [SPEAKER_01]: Nobody cares about what technology you're deploying, nobody cares about standardization,
[00:08:15] [SPEAKER_01]: the only thing that employees care about is getting paid correctly on time in that country.
[00:08:21] [SPEAKER_01]: And yeah, so the metaphor goes there's so many different ways you can think about this
[00:08:26] [SPEAKER_01]: problem.
[00:08:27] [SPEAKER_01]: They are reusable components.
[00:08:29] [SPEAKER_01]: So in the same way that you can build a stove and you can use the same stove in any country
[00:08:36] [SPEAKER_01]: in the world that is true, you can do the same with payroll, you can build components
[00:08:40] [SPEAKER_01]: that are reusable.
[00:08:41] [SPEAKER_01]: But ultimately the cooking itself is local.
[00:08:45] [SPEAKER_01]: And yeah, so that was my main thought about that.
[00:08:49] [SPEAKER_01]: The other aspect of this is the economic aspect.
[00:08:54] [SPEAKER_01]: When you're thinking about building a global payroll engine,
[00:08:57] [SPEAKER_01]: most likely you're sitting in the US or in North America, let's say, or in Western Europe.
[00:09:03] [SPEAKER_01]: That is where the capital is that's typically where the know-how sits and
[00:09:10] [SPEAKER_01]: and so you're basically building a solution at first world costs.
[00:09:15] [SPEAKER_01]: So high costs.
[00:09:16] [SPEAKER_01]: But the majority of countries you're going to be serving on much low cost countries
[00:09:21] [SPEAKER_01]: and the economics just don't work.
[00:09:25] [SPEAKER_01]: So you can technically build a global payroll engine and you can localize it,
[00:09:30] [SPEAKER_01]: but the volumes that you're going to need for this to be a profitable operations are absolutely enormous.
[00:09:37] [SPEAKER_01]: And I know this firsthand because I've worked for the biggest payroll operator in the world
[00:09:43] [SPEAKER_01]: and we have the biggest volumes and it's still we couldn't make it work in some regions.
[00:09:49] [SPEAKER_08]: Yeah, I've done your own. Do you think that the aggregator model versus say the,
[00:09:53] [SPEAKER_08]: because there's a lot of argument for the agility of that that the fact that look you're right,
[00:09:57] [SPEAKER_08]: you can't necessarily, or you, I mean there's some that are trying,
[00:10:00] [SPEAKER_08]: there are many that are trying to build it all, right?
[00:10:01] [SPEAKER_08]: And the Ammo for example, has got 100 engines.
[00:10:04] [SPEAKER_08]: You've got many like McCons trying to do that.
[00:10:06] [SPEAKER_08]: But do you see any benefit to say the aggregator model where you're,
[00:10:10] [SPEAKER_08]: you are localizing your engines under the hood, but you're,
[00:10:13] [SPEAKER_08]: but you're coordinating and consolidating at one point versus say a more director or organic native capability.
[00:10:21] [SPEAKER_08]: Do you see either of those being any more favorable than the other?
[00:10:25] [SPEAKER_01]: Well, so let me start by saying full disclosure. I mean, my team and I build the original sort of global
[00:10:32] [SPEAKER_01]: parallel engine. And so we spent 15 years just getting that right.
[00:10:40] [SPEAKER_01]: And so you'd think that I'm a proponent of that model, but in fact it's kind of turned me
[00:10:45] [SPEAKER_01]: after that model because I've seen the limits, the limitations of it.
[00:10:50] [SPEAKER_01]: I think it's very hard to compete with flexibility and the accuracy over well incentivized local
[00:11:02] [SPEAKER_01]: but well incentivized, I mean a local parallel provider who has a significant market share.
[00:11:08] [SPEAKER_01]: In other words, they have every incentive to get payroll done correctly on time every time
[00:11:14] [SPEAKER_01]: to keep up with the compliance requirements to make sure that they're well connected with all of the
[00:11:19] [SPEAKER_01]: government offices that ultimately impact, you know, payroll outputs, the people who consume the
[00:11:26] [SPEAKER_01]: payroll reports, you know, being on first name basis with some key government administration
[00:11:34] [SPEAKER_01]: people to get the inside track on the latest legislation and how it might impact
[00:11:39] [SPEAKER_01]: payroll rules and payroll reporting and, you know, just format changes in reports.
[00:11:46] [SPEAKER_01]: If you're a global operator, you have the technical tools to do all this but it's going to be
[00:11:51] [SPEAKER_01]: very hard for you to be as well connected as the local players. And so ultimately what that
[00:11:57] [SPEAKER_01]: translates into is cost because for you to be as efficient, you're just going to have to spend more.
[00:12:02] [SPEAKER_01]: You're going to have to have a bigger team, you're going to have more quality control.
[00:12:06] [SPEAKER_01]: It's just a bigger machine right in terms of development R&D and service.
[00:12:13] [SPEAKER_01]: So I just think that local players are inherently always going to be more efficient.
[00:12:17] [SPEAKER_08]: Yeah, well, and they're on the ground, right? I mean, they're living at their action.
[00:12:21] [SPEAKER_08]: Making making the action happen a lot of times the last mile even if you do have the
[00:12:25] [SPEAKER_08]: cow can genie still needs some of that. Local, we just thought we were just talking this on an
[00:12:30] [SPEAKER_08]: episode recently about Africa how you have to take in some entities paper, wedding paper,
[00:12:36] [SPEAKER_08]: you know, to the with signatures to the to the local offices. So in a lot of ways, they are
[00:12:42] [SPEAKER_08]: payroll right on the ground even if there's a cow can genie in your system. Hi, I'm Stephen Rothberg
[00:12:47] [SPEAKER_02]: and I'm Jeanette Leads. And together, we're the co-hosts of the high volume hiring podcast.
[00:12:52] [SPEAKER_03]: Are you involved in hiring dozens or even hundreds of employees a year? If so,
[00:12:57] [SPEAKER_03]: you know that the typical sourcing tools, tactics and strategies they just don't scale.
[00:13:03] [SPEAKER_02]: Yeah, our bi-weekly podcast features news, tips, case studies and interviews with the world's
[00:13:08] [SPEAKER_02]: leading experts about the good, the bad and the ugly when it comes to high volume hiring.
[00:13:13] [SPEAKER_01]: Make sure to subscribe today. Absolutely and by the way, I started my career in Africa so I'm
[00:13:20] [SPEAKER_01]: very familiar with this sort of very long tale of you know small simple payrolls and I say
[00:13:27] [SPEAKER_01]: I'm doing a quotes when I say simple because it's never simple. Everything has its own
[00:13:34] [SPEAKER_01]: idiocincrecies and if you don't know what they are, you're not going to get it right. So
[00:13:43] [SPEAKER_01]: when I started like 30 years ago, technology was a problem. I think a lot of countries didn't
[00:13:51] [SPEAKER_01]: have access to the kind of technology that would allow them to build efficient payroll systems.
[00:13:59] [SPEAKER_01]: I mean, still now a little bit but you know 20 years ago it was quite common to see
[00:14:05] [SPEAKER_08]: payroll engines that were just terrible. Yeah, I would argue they weren't good at development.
[00:14:09] [SPEAKER_01]: They were terrible at development and the products they built were just terrible products.
[00:14:14] [SPEAKER_01]: They just didn't work, right? They couldn't do one thing. They couldn't do off-cycle,
[00:14:18] [SPEAKER_01]: they couldn't do retrocale, I mean you know, they were limitations and so they would typically
[00:14:24] [SPEAKER_01]: force the customer to do unnatural things. This was a real problem 20 years ago.
[00:14:30] [SPEAKER_01]: I would say today you can get the best technology from the cloud. Anybody anywhere in the world can
[00:14:38] [SPEAKER_01]: develop a modern payroll engine. You have the tools. So technology is no longer a reason to do a centralized
[00:14:48] [SPEAKER_01]: payroll development project, right? It made a lot of sense 20 years ago but now it's not.
[00:14:54] [SPEAKER_01]: If I'm a small company in the middle of Africa and I don't have many resources,
[00:14:58] [SPEAKER_01]: I can still get the latest and greatest technology to build a payroll engine.
[00:15:02] [SPEAKER_01]: So the advantage of you know, the big players over the small players is vanished.
[00:15:09] [SPEAKER_01]: So what's the value out of building a global payroll engine?
[00:15:13] [SPEAKER_01]: And the argument always goes back to well we can standardize better.
[00:15:18] [SPEAKER_01]: But the reality is you can't because standardization and I know this because we've tried to do it.
[00:15:24] [SPEAKER_01]: Standardization you can do some standardization of course but the standardization that matters
[00:15:29] [SPEAKER_01]: you can't really do because the process of payroll is inherently different in every country.
[00:15:33] [SPEAKER_01]: So it's not a technology problem. It's a workflow problem. And those are,
[00:15:40] [SPEAKER_01]: if it's not a technology problem then you're not going to solve it with technology.
[00:15:46] [SPEAKER_08]: You mentioned before your point of view that the system of record is actually killing the industry.
[00:15:53] [SPEAKER_08]: Is that what you're referring to here in some ways?
[00:15:56] [SPEAKER_01]: It kind of, yeah it's actually a similar, yeah it's similar. It's not exactly the same in my mind.
[00:16:04] [SPEAKER_01]: When I talk about that I make reference to why ERP got so successful in why it was so vital
[00:16:11] [SPEAKER_01]: that ERP was successful for the world. My first years of work were pre ERP days.
[00:16:19] [SPEAKER_01]: So I saw when I was talking about that A is 400 earlier, that's a perfect example.
[00:16:24] [SPEAKER_01]: When somebody designed that A is 400 payroll system that I worked on, they did not have any
[00:16:31] [SPEAKER_01]: reference data model. They just made it up. They just literally instructed a system out of nothing.
[00:16:39] [SPEAKER_01]: And so there was the case for all enterprise systems. Things were just built from the ground up
[00:16:43] [SPEAKER_01]: over decades of development and nothing made sense. You couldn't integrate any system with any
[00:16:49] [SPEAKER_01]: other because none of these things could talk to one another because they were so different.
[00:16:54] [SPEAKER_01]: And that was a mess that needed to be cleaned up. So ERP came alive because of this,
[00:17:00] [SPEAKER_01]: that was the reason that ERP came along is to essentially address this problem.
[00:17:06] [SPEAKER_01]: But in the process of doing that it created a huge other problem which is this idea that you can
[00:17:14] [SPEAKER_01]: model everything. So you can have engineers sitting in Germany because I mean, I'm going to say
[00:17:20] [SPEAKER_01]: P guy. So I'll use Germany as the example, but it's the same anywhere. It could be in San
[00:17:25] [SPEAKER_01]: Francisco or anywhere else. You have a bunch of really smart people. We sit in a room, get on a white
[00:17:31] [SPEAKER_01]: board and say, okay, how do we design a global system? And they're going to do this the best they
[00:17:36] [SPEAKER_01]: can. And they're going to formalize the data model. They're going to formalize rules. They're
[00:17:43] [SPEAKER_01]: and those things will then dictate for decades to come. Like 30, 40, 50 years after that will
[00:17:52] [SPEAKER_01]: dictate how business is done for that particular function. It's kind of insane. You think about it.
[00:18:00] [SPEAKER_01]: Yeah. And the people who actually know how business should be done, they're not those are not those
[00:18:06] [SPEAKER_01]: people. In terms of payroll, you really want to know how payroll works and how to optimize a
[00:18:12] [SPEAKER_01]: payroll. You need to ask somebody who does payroll every month in the country where it's done
[00:18:18] [SPEAKER_01]: and have a conversation with these people. And that's where the optimization lives.
[00:18:24] [SPEAKER_01]: So the problem with system of records is that they're indirectly stifling innovation everywhere else
[00:18:32] [SPEAKER_01]: by setting this universal framework, which makes sense for no one.
[00:18:38] [SPEAKER_01]: So what do you think that means for payroll then? Well, I think so back to this aggregation model.
[00:18:44] [SPEAKER_01]: I think if you take an aggregation model, it makes more sense on so many levels. Because aggregation
[00:18:52] [SPEAKER_01]: is an emergent phenomenon, meaning that those are operations that happen at local level,
[00:19:00] [SPEAKER_01]: independently of one another. They all kind of do similar things, right? payroll in South Africa is
[00:19:05] [SPEAKER_01]: kind of similar to payroll in Spain, but it's not the same. And you do this 150 times or 180 times
[00:19:13] [SPEAKER_01]: or how many countries you have. And out of this with the tools we have now, meaning machine
[00:19:20] [SPEAKER_01]: learning, artificial intelligence, I was going to use the word big data, but that's antiquated now.
[00:19:27] [SPEAKER_01]: But the ability to analyze large sets of similar but unrelated data and you can emerge order out
[00:19:40] [SPEAKER_01]: of this chaos. It's actually really simple to do. So instead of trying to force everybody to use
[00:19:45] [SPEAKER_01]: the same rules and the same standards and the same structures and the same data model, let people
[00:19:50] [SPEAKER_01]: do what they think is right. And then overlay that with sort of AI based analysis and then get
[00:19:59] [SPEAKER_01]: your data out, standardize your data model if you're like, but do it on the way out, don't get
[00:20:03] [SPEAKER_01]: in the way of people building products. It's a reporting problem. It's not a design problem.
[00:20:09] [SPEAKER_08]: Yeah, interesting. One of the other things that you've talked about before too is the idea
[00:20:15] [SPEAKER_01]: parallel outsourcing is its own worst enemy. What do you mean by that? I've sold and met a prospect
[00:20:22] [SPEAKER_01]: or a prospect or any company, or any HR person that said, I really want to keep peril in house.
[00:20:32] [SPEAKER_01]: I've met a few times, right. I'm not gonna lie. Maybe 10 times in my entire career. I've spoken
[00:20:37] [SPEAKER_01]: to someone who would say something like this. Everybody wants to outsource because it just makes
[00:20:42] [SPEAKER_01]: just one of those things. I mean it's no coincidence that it was the first outsourced process
[00:20:49] [SPEAKER_01]: in enterprise, right? When ADP started this was the first time that anybody actually outsourced any
[00:20:54] [SPEAKER_01]: type of accounting in a electronic way. So the vast majority of companies out there would prefer
[00:21:02] [SPEAKER_01]: not to do their own payroll. So then let me ask you why is that the vast majority of them still do?
[00:21:09] [SPEAKER_01]: Yeah, I got a few answers for that. Well yeah and so they're all in this to reasons exactly
[00:21:14] [SPEAKER_01]: I mean this is why we're talking about this. I think one of the biggest reasons is simply the cost
[00:21:19] [SPEAKER_08]: of changing. Yep. The pain. Yeah and the fear. There's so much fear. I think the other angle of
[00:21:26] [SPEAKER_04]: that is just like there's no single agreement of what it means when somebody says I want to outsource
[00:21:33] [SPEAKER_04]: for some folks is just technology for others, you know, clearly there's the tax and
[00:21:38] [SPEAKER_04]: you know and some of the end services or service bureau type stuff. And then there's this
[00:21:44] [SPEAKER_04]: all this gray stuff that even the providers in the marketplace can't figure out how to align
[00:21:49] [SPEAKER_04]: on their taxonomy they'll call whatever heck they want to call it, right? Other than it's comprehensive
[00:21:54] [SPEAKER_04]: or benefits services or I mean it means something different to every provider, every model and
[00:21:59] [SPEAKER_04]: trying to parse those nuances isn't impossible task even with a fairly sophisticated buyer,
[00:22:07] [SPEAKER_04]: much less the unsophisticated buyer. And I don't know if that will change anytime soon.
[00:22:13] [SPEAKER_08]: Yeah that comment about people not you know not totally outsourcing it or going
[00:22:17] [SPEAKER_08]: outsourcing or fewer people doing it reminds me of I don't know if you've seen Thomas Otter's
[00:22:25] [SPEAKER_08]: quote about you know we're moving billions of dollars through these rudimentary processes and
[00:22:32] [SPEAKER_08]: systems that are date outdated right I can't remember what it is exactly but but he's right
[00:22:36] [SPEAKER_08]: right we're processing millions and millions billions often on excel and other tools. I mean
[00:22:41] [SPEAKER_08]: I've had vendors tell me that in some long-tailed places excel still their biggest competitor.
[00:22:45] [SPEAKER_01]: It's absolutely true that excel is the primary technology of the parallel industry is exist.
[00:22:51] [SPEAKER_01]: Yeah is that cost re-leg? Why is that do you think? Oh well we can get into that conversation
[00:22:56] [SPEAKER_01]: in a minute because excel is a fascinating topic it's like it's like learning another language
[00:23:02] [SPEAKER_01]: and it feels true but I was going to pick up on what Julie was saying so there's no standardization
[00:23:09] [SPEAKER_01]: of service which by the way is to me is one of the key reasons why parallel services should always
[00:23:15] [SPEAKER_01]: be local first. It because the very fact that it's so different from country to country means that
[00:23:20] [SPEAKER_01]: it's very hard to standardize across the world and so you know in the US benefits is a big deal right
[00:23:28] [SPEAKER_01]: managing benefits is a very big deal and you can't really run a payroll for enterprise unless
[00:23:33] [SPEAKER_01]: you have a solution for benefits somewhere. You know in most other countries people have no idea
[00:23:39] [SPEAKER_01]: what you're talking about right there's not even something on their radar um the fact that he
[00:23:44] [SPEAKER_01]: is just an example but this exists for everything and so I think it reinforces the idea that it
[00:23:51] [SPEAKER_01]: should be a local service, high-pilocal service I think that those were your words peat on one of
[00:23:55] [SPEAKER_01]: your posts. So the primary reason I think that people don't outsource is that it's just easier
[00:24:03] [SPEAKER_01]: and perceive this less risk to continue doing it in-house. It's not because they want to do it in
[00:24:09] [SPEAKER_01]: it's just that it's less costly in terms of resources risk and money. Yeah there's still this idea
[00:24:14] [SPEAKER_08]: I think Julie you could probably vouch for this. I think there are still a lot of folks out there
[00:24:18] [SPEAKER_08]: that think if you outsource outsource means cheaper and I have repeatedly told people you cannot
[00:24:24] [SPEAKER_08]: assume that you're you're going in you're stepping into an innovation cycle an innovation engine
[00:24:29] [SPEAKER_08]: that should presumably be future proofing I hate that word uh your payroll you can't expect that to be
[00:24:36] [SPEAKER_08]: cheaper than the clunky mess that you have today. How like this idea that that's what you're
[00:24:41] [SPEAKER_08]: going to do just doesn't I don't think it only works is that no what do you think Julie? I think
[00:24:46] [SPEAKER_04]: the other part of that is you know technology great technology is doing more but unless you really
[00:24:52] [SPEAKER_04]: have lived a little bit of payroll on different flavors of payroll you kind of think about
[00:24:56] [SPEAKER_04]: it still in the age old bookkeeper you know like how much time did you spend and I'm going
[00:25:00] [SPEAKER_04]: to apply that by rates and take out some taxes and voila right I finished a finish my payroll
[00:25:06] [SPEAKER_04]: kind of the same framework around the world and that underplays significantly what we've been
[00:25:11] [SPEAKER_04]: talking about for over a year now two years probably that the payroll the art of payroll is really
[00:25:18] [SPEAKER_04]: in the complexity and the compliance and just that it's almost like being a lawyer or being an
[00:25:24] [SPEAKER_04]: accountant and the certifications aren't there and you know but when you really are doing payroll
[00:25:29] [SPEAKER_04]: and getting into payroll you are doing a higher-end job and not a lower-end job if you have the
[00:25:36] [SPEAKER_04]: right enabling tools right and so you can't just expect it's a transactional low-level activity
[00:25:42] [SPEAKER_04]: that's going to be outsourced at the cheapest price I mean you can expect that but you you know
[00:25:47] [SPEAKER_04]: you get what you get. Yeah yeah yeah yeah would you pay for for sure for sure. So I think two
[00:25:54] [SPEAKER_01]: things around this one is the implementation friction cost the time that it takes to implement
[00:26:00] [SPEAKER_01]: payroll so if a large company let's say operating in 10 countries decides to outsource payroll
[00:26:07] [SPEAKER_01]: it's a two or three year project that's the reality and I think to back to your question about
[00:26:13] [SPEAKER_01]: why I think that you know the outsourcing industry is its worst enemy is because it's never
[00:26:19] [SPEAKER_01]: dealt with that problem. There is an assumption and all the providers it's almost like
[00:26:24] [SPEAKER_01]: there's a tacit degree medical across all providers we're going to charge a lot of money for
[00:26:29] [SPEAKER_01]: implementation and it's going to take a lot of time and I'm not blaming anyone because I've been
[00:26:35] [SPEAKER_01]: part of the problem my entire career but if you're a customer the first thing you see about this
[00:26:42] [SPEAKER_01]: project of yours to standardize and do better payroll to Julie's points and like to get it done
[00:26:47] [SPEAKER_01]: correctly and you know is this massive upfront investment and people talk away. This is going to
[00:26:55] [SPEAKER_01]: like yeah yeah yeah yeah it takes me years why why do I bother right? And the nature of payroll
[00:27:01] [SPEAKER_01]: in a company is because it's typically not seen a strategic I mean it's vital but not strategic
[00:27:07] [SPEAKER_01]: the projects get funded first and so I think that the level of outsourcing that we see currently
[00:27:16] [SPEAKER_01]: is a fraction of what it could be and one of our big goal with the debt scale is removing
[00:27:24] [SPEAKER_01]: that upfront implementation costs completely yeah and you know that's one of the things that
[00:27:31] [SPEAKER_01]: that we want to buy key features if you like and it's the reason we found
[00:27:35] [SPEAKER_01]: of the company is like okay can we make implementation take one hour instead of six months
[00:27:41] [SPEAKER_01]: yep and what would it take to do that so that's that's the answer to your question but then you
[00:27:50] [SPEAKER_01]: also right sorry about Excel I love talking about Excel because Excel is fascinating to me
[00:27:56] [SPEAKER_01]: you know we used to run large design teams and UX research and we used to do all of
[00:28:02] [SPEAKER_01]: all these amazing UX people and they used to come up with all these amazing UIs and we used to
[00:28:11] [SPEAKER_01]: you know how many clicks to do this and how much do you move your mouse around and you know all
[00:28:16] [SPEAKER_01]: these studies to try and optimize screens and at the end of the day the truth is a real competitor
[00:28:23] [SPEAKER_08]: was Excel and we all have it right it's cheap as well but it's you know certainly not viable
[00:28:29] [SPEAKER_08]: for the future but but to Rome you know it's interesting that what you're saying that that theme
[00:28:33] [SPEAKER_08]: of of the the arduous heavy lift deployment I think that's why you're seeing the SaaS players like
[00:28:39] [SPEAKER_08]: the pace slips of the world right getting into managed service deals and winning because they
[00:28:43] [SPEAKER_08]: ROI and the speed to market that they can do or achieve is significantly different than this
[00:28:49] [SPEAKER_08]: rip and replacementality of you know everything's got to go and we've got to start from scratch
[00:28:54] [SPEAKER_08]: and it's going to be this long phase approach where these guys can stand up lay on top of whatever
[00:28:59] [SPEAKER_08]: you know your choice of of local providers or they can bring to local providers and I think
[00:29:08] [SPEAKER_08]: about the reasoning behind U.K.G buying a media I asked you know hey no engines why why amitis and
[00:29:15] [SPEAKER_08]: they said this was an engine play this was an agility and speed play right the ability for us to bring
[00:29:20] [SPEAKER_08]: global data and global payroll to a consolidated point harmonized point quickly for that ROI right
[00:29:27] [SPEAKER_04]: to me what's interesting about that part of the market right it's a it's the middleware market right
[00:29:32] [SPEAKER_04]: the pace slips the bias the pace are right in that whole area and it's still emerging
[00:29:40] [SPEAKER_04]: and it doesn't tackle the same level of services in some way and so you know it's growing
[00:29:49] [SPEAKER_04]: and it's hard to grow and to grow yourself out around the globe as we find most of these end up with
[00:29:54] [SPEAKER_04]: you know private equity funding and you know there's a lot of stuff that has to be done to make
[00:29:59] [SPEAKER_04]: some of these things happen and I've worked recently on implementing one and there's still a
[00:30:05] [SPEAKER_04]: lot of hanging chads let's just say right as you know kind of work toward maturity in some
[00:30:11] [SPEAKER_05]: of the some of those areas. Hi there I'm Peter Zolman I'm a co-host of the inside job boards and recruitment
[00:30:18] [SPEAKER_02]: marketplaces podcast and I'm Steven Rothberg and I guess that makes me the other co-host. Every other
[00:30:24] [SPEAKER_05]: we're joined by guests from the world's leading job site. Together we analyze news about general
[00:30:29] [SPEAKER_02]: niche and aggregator job board and recruitment marketplaces sites make sure you sign up and subscribe
[00:30:35] [SPEAKER_00]: today. Hey it's Bob Poverho's to you podcast human centric AI AI driven transformation hiring
[00:30:44] [SPEAKER_00]: for skills of potential and network force ecosystems responsible innovation these are some of the
[00:30:51] [SPEAKER_00]: teams my expert guests and I chat about and we certainly geek out on the details. I think
[00:30:55] [SPEAKER_08]: too technical I hope you check it out. Yeah yeah absolutely. Jerome what do you think about
[00:31:01] [SPEAKER_08]: the idea of this sort of race to the bottom you know are we commoditizing payroll to the point
[00:31:06] [SPEAKER_08]: where it's not going to be really worth it for vendors to even be in the game anymore. I've had
[00:31:11] [SPEAKER_08]: so many questions about this especially in the E.O.R. world which I know you you get a lot you
[00:31:15] [SPEAKER_08]: your customers are E.O.R. and payroll providers right so what do you think about that this sort
[00:31:21] [SPEAKER_01]: of idea that we're in a race to the bottom? It's a classic supply and demand problem I think
[00:31:26] [SPEAKER_01]: that demand right now is soft and that's the reason that demand was high before it was a zero
[00:31:32] [SPEAKER_01]: interest rate phenomenon for sure you know 10 years ago or six seven years ago when an interest
[00:31:38] [SPEAKER_01]: rate were basically zero massive capital investments across all industries around the world meant
[00:31:44] [SPEAKER_01]: that you know companies were hiring the best engineers they could wherever they could and so
[00:31:49] [SPEAKER_01]: that created the initial burst of demand that got you know E.O.R. started. The money always follows
[00:31:57] [SPEAKER_01]: and so there was a massive influx of investments in the E.O.R. industry and we saw hundreds
[00:32:03] [SPEAKER_01]: thousands of E.O.R. providers sprouting everywhere and unfortunately with this high inflation
[00:32:11] [SPEAKER_01]: situation that sort of occurred you know COVID hit and nobody expected that it's frozen the growth
[00:32:19] [SPEAKER_01]: of the industry and when I say frozen not completely frozen but a lot of the assumptions around growth
[00:32:26] [SPEAKER_01]: just on you know on panning out so there is that so there's a glut of supply and the demand has
[00:32:35] [SPEAKER_01]: not kept growing now it might restart but for now that's what it is and then the supply side
[00:32:40] [SPEAKER_01]: it's hard to get differentiated I mean they're all our friends similar services and you know
[00:32:48] [SPEAKER_01]: you try to differentiate itself so some of them have taken a technology differentiation so they
[00:32:52] [SPEAKER_01]: simply say we're a technology first provider so the reason you might want to go with us is because
[00:32:58] [SPEAKER_01]: we're super easy to connect to so you can you know connect your existing systems into us and it's
[00:33:04] [SPEAKER_01]: all API driven you never have to talk to a human being everything everything's done programmatically
[00:33:10] [SPEAKER_01]: and you know and the cost is low and then you've got others doing the classic sort of ADP thing
[00:33:16] [SPEAKER_01]: which is yeah we're a service company you know with us anytime you have a problem you just pick up
[00:33:22] [SPEAKER_01]: phone 24-7 and you'll have a specialist on the island line but at the end of the day they are
[00:33:28] [SPEAKER_01]: more suppliers than there is demand and so that's the race to the bottom unfortunately and a lot of
[00:33:33] [SPEAKER_01]: these guys are starting to look at other sort of tangential business opportunities like global
[00:33:42] [SPEAKER_01]: payroll for example which is really not their core business and a lot of them are discovering
[00:33:49] [SPEAKER_01]: what all of the global payroll providers have known for a very long time which is it's really
[00:33:54] [SPEAKER_01]: really hard to get good gross margins on payroll you have to be extremely efficient like it's
[00:34:02] [SPEAKER_01]: when you're an EOA player the game is you sell your service as high as you can
[00:34:08] [SPEAKER_01]: a very high cost a very high price per worker and for that you give them complete into
[00:34:16] [SPEAKER_01]: end service right so hire me a worker in country x and I don't want any problems I want everything to be
[00:34:24] [SPEAKER_01]: smooth I don't want to have to deal with any issues that's what you're getting when you're a global
[00:34:29] [SPEAKER_01]: payroll provider it's the opposite it's like here is the service you're getting here's a list of
[00:34:33] [SPEAKER_01]: these things I'm going to do for you I'm not going to do one extra thing right if it's not listed you're
[00:34:39] [SPEAKER_01]: not getting it and but you're getting it for 20 bucks some on yeah I wish we had some
[00:34:44] [SPEAKER_04]: defects peed I like preach your own breach we do we actually do I just never I don't know how to use them
[00:34:49] [SPEAKER_08]: well but we do we need a we need like a yay whatever but no I completely agree drum do you think
[00:34:57] [SPEAKER_08]: in some ways that the global payroll platforms are are are relegating themselves to middle where
[00:35:03] [SPEAKER_08]: or maybe not relegating but like are they turning into middle where I don't know I mean this
[00:35:08] [SPEAKER_01]: is that I wrote a blog about this because I was wondering out loud what you know what might
[00:35:13] [SPEAKER_01]: happen there I think if this were me that's what that that is what I would do I would say
[00:35:21] [SPEAKER_01]: I don't want to be in you are because that's so before I answer the question
[00:35:26] [SPEAKER_01]: so what this is doing is it's forcing you ask to want to become global payroll providers yes they all
[00:35:32] [SPEAKER_08]: think they are and yes they're not yeah yeah they blurred the line the marketing is blurred the
[00:35:37] [SPEAKER_01]: lines that's beyond us you and by the way one of our key messages is if you really want to do this
[00:35:43] [SPEAKER_01]: I we don't recommend you do it but if you really want to do this do this we can help you do this
[00:35:48] [SPEAKER_01]: because we know global payroll so we can help you transition from one to the other but your question
[00:35:54] [SPEAKER_01]: about the the the payroll providers is the other way around right so can can payroll providers
[00:35:59] [SPEAKER_01]: we do high volume low margin highly automated businesses can they become a white glove
[00:36:07] [SPEAKER_01]: concierge type of service which is what you're asking and I would say purely from a DNA standpoint
[00:36:14] [SPEAKER_01]: in other words how finances are organized in those companies how investments are decided in
[00:36:20] [SPEAKER_01]: those companies who invest in those companies so who are the you know private equity funds that
[00:36:27] [SPEAKER_01]: you know that have invested in those companies I would say no because they would have to
[00:36:32] [SPEAKER_01]: to be a different they would have to become a different animal they would have to build new teams new
[00:36:38] [SPEAKER_01]: sales teams new service teams EOR is not a natural extension of payroll I don't know if the
[00:36:44] [SPEAKER_04]: reverse is true either I am not sure that global payroll is an extra natural extension of EOR either
[00:36:51] [SPEAKER_01]: you guys are you guys familiar with that article from untrue shama who wrote 10 years ago
[00:36:58] [SPEAKER_01]: about the stack fallacy no no tell me about that the fallacy is that you always think
[00:37:06] [SPEAKER_01]: that you can understand and therefore so far the problem that is above you right so if you're a
[00:37:13] [SPEAKER_01]: database provider you think you can become an EOR P player because your customers are EOR P customers
[00:37:19] [SPEAKER_01]: I got because it's adjacent you're saying well it's it's actually above yeah so it's the same
[00:37:23] [SPEAKER_01]: concept but it's above you right in the stack you know technology stack it always feels like
[00:37:28] [SPEAKER_01]: you always feel like you can understand the next problem so you could solve for it but it's a fallacy
[00:37:33] [SPEAKER_01]: because you don't really understand you think you understand but you don't where as in fact
[00:37:38] [SPEAKER_01]: you would probably be more successful going down stack if you really wanted to even though
[00:37:44] [SPEAKER_01]: going down stack may seem obscure because you would become your own customer and because you are
[00:37:51] [SPEAKER_01]: your own customer if you're going down stack your building technology that you would consume yourself
[00:37:56] [SPEAKER_01]: being your own customer is the best guarantee for success and and I'll often think of that
[00:38:03] [SPEAKER_01]: and and I've seen this turn out to be true in in so many instances so I think it was a brilliant
[00:38:09] [SPEAKER_01]: insight that he had but in in in the context that we're discussing today if you are in EOR
[00:38:17] [SPEAKER_01]: and you start doing global payroll you become your own customer right you can go down stack
[00:38:24] [SPEAKER_01]: is what you're saying right but if you're a global payroll provider and you want to become an EOR
[00:38:29] [SPEAKER_01]: you're going up stack you think you know what a EOR does and you think you know what EOR customers want
[00:38:35] [SPEAKER_01]: but you don't you have no idea because they're not your customers yeah I think of the down
[00:38:41] [SPEAKER_04]: stack in since it's more about do you really want to go down stack right because you described beautifully
[00:38:46] [SPEAKER_04]: you know that the difference in margin the difference in pricing the difference in you know
[00:38:51] [SPEAKER_04]: in in the business itself between EOR and global payroll and so you may think you want to go down
[00:38:59] [SPEAKER_04]: stack I think time will tell right how many really stay down stack or do good you know do a
[00:39:06] [SPEAKER_04]: good job of that and enjoy that as an extension of the business yeah by the way that what you just said
[00:39:12] [SPEAKER_01]: really is what I was saying a few years ago exactly that what I came to learn thanks to my amazing
[00:39:20] [SPEAKER_01]: strategy officer Brad who comes from the EOR world what I came to understand is that they don't
[00:39:27] [SPEAKER_01]: actually have a choice because if you're a successful EOR provider and you have successful customers
[00:39:34] [SPEAKER_01]: they will grow in size and they will outgrow you it's the natural order of things right so
[00:39:41] [SPEAKER_01]: you know you're helping a company you know higher two sales people in Barcelona Spain
[00:39:46] [SPEAKER_01]: and then three years later they decide to open a legal entity in Spain and now they got 100 people there
[00:39:53] [SPEAKER_01]: right you'd think this is a good story but it's not yeah because if you're the EOR you're not going
[00:40:00] [SPEAKER_04]: from two to a hundred you're going from two to zero yeah except at what point in time right does
[00:40:06] [SPEAKER_04]: the EOR premium model top out and then they up to something else but but what your point is actually
[00:40:14] [SPEAKER_04]: if you're doing it multiple if you're successful multiple clients are coming to and you're
[00:40:22] [SPEAKER_08]: just the single client well the sure the turn for those guys is so much that's why you know they've
[00:40:26] [SPEAKER_08]: had to get into all these areas right there they're a talent solution they're a payroll heavy
[00:40:30] [SPEAKER_08]: solution they're an employment solution and none of them have particularly impressive tech to
[00:40:36] [SPEAKER_08]: lay on top of all of what is arguably all the same vendors locally supporting all of these same
[00:40:42] [SPEAKER_08]: solutions these 150 or 200 it feels like there's a new EOR every day you know it's like like
[00:40:49] [SPEAKER_08]: what happens like who's going to be left standing drum I don't know who's going to be left standing
[00:40:53] [SPEAKER_01]: but I think just to finish on that conversation the client acquisition cost for EOR is relatively high
[00:41:00] [SPEAKER_01]: it is so you would all other things being equal you would much rather keep your existing clients
[00:41:06] [SPEAKER_01]: then go and hunt for new ones especially given what you guys have said which is there's so many of
[00:41:11] [SPEAKER_01]: not so much competition out there so so they are actually you know sort of painting themselves in a corner
[00:41:17] [SPEAKER_01]: Julie because as they grow like you said you can no longer you know the client can no longer
[00:41:25] [SPEAKER_01]: afford to keep an EOR service for 100 and so that's part of the reason why they'd be setting a
[00:41:32] [SPEAKER_01]: legal entity that's not the only reason in many countries you're forced by law to do that
[00:41:37] [SPEAKER_01]: so so there's a natural tapering off of growth that occurs in the EOR space
[00:41:45] [SPEAKER_01]: and so if you're the EOR you're thinking okay I've invested all of this effort technology money
[00:41:51] [SPEAKER_01]: in getting my payrolls you know efficiently run as efficiently as as you can right
[00:41:58] [SPEAKER_01]: is there a way for me to leverage those to sell more payroll it's like a natural thing
[00:42:04] [SPEAKER_01]: to do what else are you going to do you know I think who's going to be left standing I have no
[00:42:11] [SPEAKER_01]: yet and I don't want to pick winners but it's interesting to me how the leaders are following
[00:42:18] [SPEAKER_01]: very different strategies I mean deal for a lot you know deal is going for an IPO
[00:42:25] [SPEAKER_01]: that's their strategy and they're maximizing they're portfolio you know in view of of doing a great
[00:42:33] [SPEAKER_01]: public offering that's the that's the route they taking others are going technology only
[00:42:41] [SPEAKER_01]: and optimizing you know the hell out of a tech stack in the hope that they will bring the
[00:42:48] [SPEAKER_01]: price down and serve a market that is very price sensitive and once really good tech
[00:42:55] [SPEAKER_01]: which of these and others as I said you know will focus on the service side
[00:43:00] [SPEAKER_01]: which actually is a really good idea like I like this idea of focusing on service because
[00:43:05] [SPEAKER_01]: it's too easy to do tech it's it's easy to find good engineers it's relatively easy to automate
[00:43:12] [SPEAKER_01]: everything but does it actually answer your customers problems does it really help out your customers
[00:43:19] [SPEAKER_01]: in the end it's like when you automate everything you're helping yourself first and your customers second
[00:43:25] [SPEAKER_04]: it's funny I think I think that value proposition the challenge with that is employers
[00:43:31] [SPEAKER_04]: then believe oh that's the easy part or I can just put you know my employee x on this and
[00:43:38] [SPEAKER_04]: cover that as well and it's it becomes a conversation about the quality right and how much
[00:43:46] [SPEAKER_04]: where and how you add the best value and what that value is which is something we've seen
[00:43:51] [SPEAKER_08]: as underrepresented for a little while now yeah you know one of the other things that you
[00:43:56] [SPEAKER_08]: posted recently I was really fascinated by you you posted this in conjunction with the Benedict
[00:44:00] [SPEAKER_08]: Evans calling uh GNI capability a commodity of infrastructure and you mentioned in there that
[00:44:07] [SPEAKER_08]: HR and payroll data is the lifeblood of payroll service industry and that it is quote been overlooked
[00:44:11] [SPEAKER_08]: and competitive as a competitive differentiator and essentially ignored as a value add all together
[00:44:16] [SPEAKER_08]: talk about that a little bit and how do you think uh providers can reverse that well I'll summarize
[00:44:24] [SPEAKER_01]: the reason why I said this it's very simple so when I was uh when I was working with ADP and
[00:44:30] [SPEAKER_01]: I was responsible for the global view platform so I had the R&D budget for global view worldwide
[00:44:36] [SPEAKER_01]: and if I looked at my budgets and if I look at my costs I realized that 75% of my costs are in
[00:44:45] [SPEAKER_01]: the cost right technology costs we're relating to data transfer of some kind
[00:44:51] [SPEAKER_01]: wow interfaces in interfaces out custom reporting custom interfaces cleaning data onboarding clients
[00:45:00] [SPEAKER_01]: onboarding tools um all of that not of it oh I mean not not of it 25% only was actual payroll
[00:45:10] [SPEAKER_01]: and and since then I've had a number of different roles I've had both advisory roles but also you
[00:45:16] [SPEAKER_01]: know um executive roles in sort of similar context and I've seen exactly the same thing everyone
[00:45:23] [SPEAKER_01]: has the same experience most of costs have to do with dealing with data because the thing is
[00:45:31] [SPEAKER_01]: whether you have in-house payroll or whether you outsource it it really doesn't make that much of a
[00:45:35] [SPEAKER_01]: conference um in either case people who do it well will have templates they will have standard sets of
[00:45:42] [SPEAKER_01]: rules so if you want to go and set up payroll um you know in France they're not going to go and
[00:45:48] [SPEAKER_01]: set up payroll from scratch for you they have you know 150 rules that they've used tested they test
[00:45:54] [SPEAKER_01]: them every month you know those codes those calculations that are assigned to codes um you know
[00:46:01] [SPEAKER_01]: networks like these exist they these are models and when you come with your requirement as a customer
[00:46:07] [SPEAKER_01]: all they do is they pick from that list of things that are already tested and they just re-named
[00:46:14] [SPEAKER_01]: some of them to give them the names that you want right that you're familiar with and that's how
[00:46:19] [SPEAKER_01]: they set up payroll for you that's how it works everywhere so the amount of work involved in
[00:46:26] [SPEAKER_01]: setting up payroll calculation is actually almost trivial compared to the overall cost right most of
[00:46:33] [SPEAKER_01]: the costs have to do with all right let's sit down mr. customer so what day did you have and I
[00:46:39] [SPEAKER_01]: say well you know we use a work day system okay all right do you know how to export your data no
[00:46:43] [SPEAKER_01]: we've never done it before okay so they're going to need to get a consultant and then they're going
[00:46:48] [SPEAKER_01]: to run the pencey thing and then they're going to give us the date yeah they're going to give
[00:46:52] [SPEAKER_01]: the panel provided the data and then the panel provided is going to say okay well there's a whole bunch
[00:46:55] [SPEAKER_01]: of things that are missing here um are you going to store them or we're going to store them
[00:46:59] [SPEAKER_01]: and then it's like hold the bait about ways the data is supposed to live and then oh by the way you know
[00:47:05] [SPEAKER_01]: we don't you know we don't want the pencey to look like this we want it slightly different and
[00:47:09] [SPEAKER_01]: and then we're going to need to adjust our integration mechanism so that we can read your pencey
[00:47:15] [SPEAKER_01]: in the way that you've produced it that's just getting the data in all right and then doing the
[00:47:22] [SPEAKER_01]: implementation it will be well you know the client one sign off on the implementation why not
[00:47:27] [SPEAKER_01]: well because we don't know if the new parallel result are similar to the old ones
[00:47:32] [SPEAKER_01]: can you prove to us that you know they similar now you have to go through the whole process of data
[00:47:38] [SPEAKER_01]: mapping all over again now you mapping legacy data to new data that can take months just just just
[00:47:45] [SPEAKER_01]: to get sign off um and then for the you know and I'm not even talking about how do you
[00:47:52] [SPEAKER_01]: reconcile parallel results how does it get back into the work day system and I'm using work day
[00:47:57] [SPEAKER_01]: it could be any system it doesn't matter right that's where the cost is this is where people spend
[00:48:03] [SPEAKER_01]: their time this is where the complexity lies this is where arguments with pence occur
[00:48:09] [SPEAKER_01]: this is where clients start hating you as a provider because that is when they start to realize
[00:48:15] [SPEAKER_01]: the amount of friction involved without sourcing yep the value degrades and in their mind
[00:48:21] [SPEAKER_01]: they're paying you to get rid of these problems and all you're doing is to throwing all this back
[00:48:26] [SPEAKER_01]: in their face and saying I don't understand your data it's not the right data you don't have enough data
[00:48:30] [SPEAKER_06]: in the bubble of luck you know what you should know you should know the you should know podcast
[00:48:38] [SPEAKER_06]: that's what you should know because then you'd be in the know on all things that are timely and
[00:48:44] [SPEAKER_06]: topical subscribe to the you should know podcast thanks yeah yeah so so to run what's the answer
[00:48:52] [SPEAKER_08]: what's is a I gonna save us is it now gonna make this better and what what do we do
[00:48:57] [SPEAKER_04]: just fix it all with us with the wave of the one that's everything that they've solved everything right
[00:49:04] [SPEAKER_01]: yes yes yes we we have a tendency of thinking that I think I'm more cynical than most
[00:49:13] [SPEAKER_01]: so I'm not gonna pretend that we solved the world's problems but we have solved some problems
[00:49:18] [SPEAKER_01]: some big ones I think I I think some aspects of the current battery of AI is a gen we talk about
[00:49:24] [SPEAKER_01]: in AI here the NLP so natural language processing capabilities of any of the AI technology that's
[00:49:34] [SPEAKER_01]: out there is absolutely amazing amazing beyond people's wildest dreams in fact and and unfortunately
[00:49:42] [SPEAKER_01]: that's also created expectations in other areas which you know or probably not gonna come true
[00:49:48] [SPEAKER_01]: but as far as natural language processing is concerned if you rethink the entire process of
[00:49:55] [SPEAKER_01]: getting data from point A to point Z which in the old days really was based around hey let's create
[00:50:02] [SPEAKER_01]: a database with a data model and then let's get the data in and we'll clean it on the way in and
[00:50:07] [SPEAKER_01]: then we'll modify it on the way out if you get away from that model and you take a much more
[00:50:13] [SPEAKER_01]: dynamic model which is let's train an AI to recognize the data patterns that matter for our
[00:50:22] [SPEAKER_01]: industry right I'm not this is not a unit I'm not talking about a universal solution to humanity's
[00:50:27] [SPEAKER_01]: problems here this is really about getting HR data from point A to point B you can train an AI
[00:50:34] [SPEAKER_01]: to be really really good at it now to train it you need a completely different architecture
[00:50:40] [SPEAKER_01]: for a platform and when I realize that I realize that none of the current players can change their
[00:50:47] [SPEAKER_01]: architecture I mean SAP is not tomorrow gonna you know give up on 50 years of you know data modeling
[00:50:56] [SPEAKER_01]: and go oh let's throw that out of the window we don't need that right and so for us we saw this as
[00:51:03] [SPEAKER_01]: a massive opportunity it's like okay for a new start or right now we can come up with a completely
[00:51:09] [SPEAKER_01]: different architecture which is entirely dynamic in other words nothing is hard coded and by training
[00:51:16] [SPEAKER_01]: the AI it can recognize the data that comes in and similarly you can train it on the data that
[00:51:23] [SPEAKER_01]: goes out so you can say data that looks like this in this country for this parallel engine or for
[00:51:30] [SPEAKER_01]: this context needs to look like that on the way out to be correct and I mean it's it's obviously
[00:51:38] [SPEAKER_01]: not an easy thing to do otherwise everybody would be doing it right but we did it we spent three
[00:51:43] [SPEAKER_01]: years of investment building this and now the end result is without any coding our system is
[00:51:49] [SPEAKER_01]: able to generate any connector so any API if we want to use the word API it can generate any
[00:51:56] [SPEAKER_01]: API from any source system to any target system and back in other words it gets data there
[00:52:03] [SPEAKER_01]: and then it gets the gross to net results back and in the process it does a full reconciliation
[00:52:09] [SPEAKER_01]: and that is something that was not even feasible five years ago you couldn't even imagine
[00:52:15] [SPEAKER_01]: that this would happen so in result are we solving the problem of the industry we are solving the
[00:52:22] [SPEAKER_01]: implementation problem our clients have gone from as I said months of implementation into hours
[00:52:30] [SPEAKER_01]: that's real today I think we have opportunities to improve in other areas so I think
[00:52:39] [SPEAKER_01]: parallel network providers and connecting those networks in the AI works great but we can still do a lot
[00:52:46] [SPEAKER_01]: more we can help our clients a lot more so we're investing a lot in that yeah so that's that's
[00:52:53] [SPEAKER_01]: where it's going I'm not gonna say it's all resolved yeah but in a few months we're releasing in
[00:53:00] [SPEAKER_01]: two months time we're gonna release well first global parallel API but basically I love it a single
[00:53:07] [SPEAKER_01]: API where you will be able to connect any HR system and I'm not talking about certified integration
[00:53:15] [SPEAKER_01]: I'm not talking about you know literally hard coding an integration with work day PC or SAP
[00:53:22] [SPEAKER_01]: success factor but it dynamically generated API that recognizes any HR system and similarly
[00:53:31] [SPEAKER_01]: you can recognize any parallel engine and connect those two seamlessly yeah that's impressive I
[00:53:37] [SPEAKER_08]: know I've seen it it's great and I tell you I have customers who are our vendor customers obviously
[00:53:42] [SPEAKER_08]: who are leveraging your solution and they're finding incredible value from it and I encourage so many
[00:53:47] [SPEAKER_08]: to check it out I think it's fantastic I love what you guys are doing man and I want to stay close to it
[00:53:53] [SPEAKER_08]: so drum if you don't mind me putting on this spot a little bit can we can we wrap this up with maybe
[00:53:56] [SPEAKER_08]: a prognostication here three years from now what do you think the global parallel global
[00:54:01] [SPEAKER_08]: URL marketplace looks like in terms of you know just tech and value prop and all of that I mean what where
[00:54:08] [SPEAKER_01]: where do we end up? I'm hoping sincerely hoping that as the interest rates start normalizing again
[00:54:16] [SPEAKER_01]: we're going to see a resurgence of the demand for EOS and hopefully that will save a lot
[00:54:22] [SPEAKER_01]: of the players that are struggling at the moment I don't see how the industry will not consolidate
[00:54:29] [SPEAKER_01]: I think it has to consolidate yeah and I think the winners will be those who figure out
[00:54:38] [SPEAKER_01]: efficient ways of acquiring other EOS or merging with other EOS merging two two networks of
[00:54:45] [SPEAKER_01]: peril is not an easy thing to do right man so I think there will be some console I don't
[00:54:54] [SPEAKER_01]: see consolidation in the next I don't see massive consolidation in the next 12 months simply
[00:55:00] [SPEAKER_01]: because it's so hard to do to expand I think it would make sense to do it but from a business
[00:55:06] [SPEAKER_01]: perspective but I think technically I struggle to see how it'll be executed yeah yeah it's going
[00:55:12] [SPEAKER_08]: to be interesting to see what happens and I do think you're right I think the EOS are in a really
[00:55:16] [SPEAKER_08]: unique position at the front front row of a huge opportunity when it comes to enabling that
[00:55:22] [SPEAKER_08]: multi-channel talent enabling the compliance and the straight through payment of those folks
[00:55:28] [SPEAKER_08]: and then also passing data back to the order to be able to make some decisions around it so
[00:55:32] [SPEAKER_08]: and the incredible insights they have right from from all that they do so I think it's really
[00:55:37] [SPEAKER_08]: going to be fascinating I do think that they've got to figure out their tech right I think there's just
[00:55:42] [SPEAKER_08]: just a lot of opportunity there with the tech to come forward I think some are doing
[00:55:46] [SPEAKER_08]: a better than others like a deal for example feels like they're turning out something new every week
[00:55:51] [SPEAKER_08]: but I think there's others that are really kind of in a in a paralyzed state where they're not
[00:55:55] [SPEAKER_08]: sure where to go with their technology so it's going to be interesting to see what what plays out
[00:55:59] [SPEAKER_01]: well I think the industry started off building appendages to existing enterprise systems right
[00:56:06] [SPEAKER_01]: so yeah you know if you think about a multinational company that we're already bought work
[00:56:11] [SPEAKER_01]: day let's say and an environmental other products most likely that they've integrated into
[00:56:14] [SPEAKER_01]: their work their platform and you know for them to go out to an EOS and hire you know the
[00:56:19] [SPEAKER_01]: 20 people in you know 15 different countries they don't need a lot of tech they just need
[00:56:26] [SPEAKER_01]: somewhere they can go onboard someone or you know pay somebody a bonus request a bonus to be paid
[00:56:32] [SPEAKER_01]: or something like that and so a lot of the platforms reflect that ethos right it's it's it's
[00:56:39] [SPEAKER_01]: it's a relatively simple technology it's it doesn't it's not designed to be fully scalable as an
[00:56:47] [SPEAKER_01]: enterprise platform but it does what it's supposed to do really really well and elegantly
[00:56:52] [SPEAKER_01]: that's what they are designed to do and I would say the vast majority that I've seen at least
[00:56:56] [SPEAKER_01]: a very elegant from an end user perspective but they are not scalable enterprise platforms
[00:57:02] [SPEAKER_01]: and what what deal is is saying and doing and others like helios I think it was a great example
[00:57:10] [SPEAKER_01]: right these guys well let's talk about helios yeah in particular they're going out of the gate saying
[00:57:19] [SPEAKER_01]: we are building for scalability for your scalability master customer we're building a platform
[00:57:24] [SPEAKER_01]: that is not really just an EOS like you would expect but also you can get all your contractors
[00:57:30] [SPEAKER_01]: all your permanence you can also get your entire HR function around this platform so they're building
[00:57:37] [SPEAKER_01]: a replacement for EOS global payroll contractor payroll as well as sort of the traditional
[00:57:45] [SPEAKER_08]: you know HR stuff yeah I love it yeah I work closely we just had Rick Campbell on recently
[00:57:51] [SPEAKER_08]: on the show yeah and not posted yet yeah not it's not up yet but it'll be it'll be there by
[00:57:57] [SPEAKER_08]: the time this runs but we I also wrote an article a very lengthy article on what they're building
[00:58:02] [SPEAKER_08]: so that'll be coming out very soon so I agree I think I think Rick's taking a very agile approach
[00:58:07] [SPEAKER_08]: to this and I think it I think it is sort of a steps towards what we're seeing you know like I said
[00:58:12] [SPEAKER_08]: with pace lip and the sass right it's it's a much more agile approach that I think is going to be
[00:58:17] [SPEAKER_01]: it's going to be interesting see how that plays out too so but it's is during for scale out of the
[00:58:22] [SPEAKER_01]: gap and that I think is is great foresight right it's going to have to execute this is this is not an
[00:58:28] [SPEAKER_01]: easy strategy execute because you're doing a lot of different things yeah yeah great point great point
[00:58:34] [SPEAKER_08]: this has been outstanding man I really really appreciate you coming on I can't wait to I always
[00:58:38] [SPEAKER_08]: love talking to you and I hope I'll see you out there we can see out on the full tech trail at all
[00:58:43] [SPEAKER_08]: the tech season HR tech season well it's you're going to be Las Vegas right yes sir multiple times
[00:58:48] [SPEAKER_08]: probably about six times before it's over Julie you're going to be Las Vegas as well yes indeed so
[00:58:56] [SPEAKER_04]: hopefully we can find an in-person moment that we are fantastic thanks guys I really appreciate it
[00:59:03] [SPEAKER_08]: great seeing you guys and we'll be back soon awesome
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