Kathleen Soderman, Managing Director at EY, led an engaging session titled “Payroll Service Delivery Models: What’s the Right Fit?” Soderman explained the pros and cons of three payroll models—in-house, co-sourced, and outsourced—and emphasized that choosing the right approach depends on an organization’s unique priorities.

In-house payroll offers faster cycle times, flexibility for last-minute changes, and retains payroll knowledge internally. However, it requires a larger team and deep in-house expertise to manage compliance and tax changes.

The co-sourced model allows for shared responsibilities between internal teams and a vendor, offering customization. Still, it can result in slower processes, reduced agility, and potential knowledge gaps.

Outsourcing payroll significantly reduces compliance risk and minimizes internal staffing needs, but it places heavy reliance on the vendor—making vendor selection a critical decision.

Soderman highlighted some of the key factors for choosing a model such as: company size, budget, scalability, employee experience, and SLAs. This prompted the audience to share some horror stories from their experiences with certain vendors.

One major takeaway is that success hinges on clearly defined KPIs, robust SLAs, and a strong working relationship with any potential vendor and you also need to consider how well they are equipped to scale with new market trends such as increased AI integration, mobile payroll solutions and more globally distributed teams.

Soderman recommended that payroll professionals to evaluate their service delivery model to optimize their payroll.

Luke Stockbridge is a global payroll consultant with JGA Recruitment