Embedded software is the future of HR tech: Make the shift

Two major trends are shaping the future of HR tech. Businesses are seeking simpler, more automated HR systems, while also facing the challenge of managing a global workforce compliantly. As a result, the market is increasingly looking for unified platforms that can handle both.

Building or acquiring all the necessary capabilities to meet these demands is no small feat; that’s why embedded HR tech is emerging as the solution to stay ahead in this evolving space. HR tech companies embedding specialized global functionality are expanding their revenue share by meeting this market demand — and those that don’t are likely to be left behind.

Ballooning HR toolkits are overwhelming, stressful, and costly

According to Josh Bersin, a renowned HR, tech, and leadership research analyst, the average business currently has over 80 HR tools on deck — with global workforces potentially using double this amount. Bersin refers to this as the “kitchen drawer problem”.

“Every time you pull it open, you look at all the stuff in there and you say ‘wow, how did this all get here? Why do I have so much stuff? Who’s using all these things? How do I get rid of the stuff I don’t need?’” he says. “Then you close the drawer and say, maybe some other time.

“That is exactly what happens with HR technology. You start to buy more things, more ‘innovative solutions’. You think they’re going to be more useful to more audiences in the organization. You start to proliferate more and more tools, and pretty soon it’s hard to shut anything off.”

It’s no surprise then, that 85% of HR leaders report being under pressure to consolidate their HR tech stacks.

Managing a global workforce adds more tech stack fragmentation

Global hiring is here to stay, as more companies launch distributed teams, and existing distributed teams expand. In Remote’s 2024 Global Workforce Report, 71% of HR leaders said that their companies had hired internationally within the last year.

At the same time, the World Economic Forum predicts that the number of global digital jobs will rise to 92 million by 2030. Typically, to manage global workforce compliance, companies use a number of separate services, from multiple payroll vendors to multiple benefits platforms. 

Counter to the trend of consolidation, this leads to new fragmentation. With this approach, manual integrations are usually necessary too, like payroll files being exchanged manually each month. This leaves more room for errors, and can become incredibly time consuming.

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As the global labor market shifts, it brings about additional challenges. Navigating compliance alone is hard. Managing payroll, benefits administration, and tax compliance across multiple countries is among the most challenging aspects of global hiring.

In Remote’s report, 43% of leaders report major pains complying with international labor laws, including:

• Payroll practices

• Time-off policies

• Family leave entitlements

• Mandatory benefits

• Contractual protections

• OHS obligations

• DEI reporting obligations

Automated, streamlined compliance and payroll are in demand

As a result, businesses want a unicorn: one single, unified HR platform that does everything. And they want it to work its magic across every region and jurisdiction they operate in, or are looking to operate in. But in reality, there is no single platform out there that can do this all.

Even for those platforms that cover a wide range of features, consistency is key. If a platform’s payroll function isn’t flawless, for instance, the rest of what’s on offer becomes redundant. Paying people compliantly across each country is the most important function a HR platform should get right, and it’s something companies with globally distributed teams find hard due to lack of in-house country expertise.

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How are HR tech companies reacting?

In my work I engage HR technology companies across the spectrum. And I typically see companies take one of the following paths to serve their customers’ global hiring needs:

• Ignore. They feel their customers don’t need international hiring. Though, this is a risky bet, as their largest, fastest growing, most lucrative customers probably do.

• Defer. They feel they have other business priorities right now. While this is understandable, as more and more new players emerge, competitive pressure will only increase. Soon it will be too late.

• Build. They feel they can build this unicorn platform in house, with every feature. This is extremely hard to complete, extremely hard to start, and extremely hard to get right. The time cost would be considerable too. Getting global payroll and employment compliance right is an experience game. We know this. Remote has spent half a decade running global payroll and compliance across 100+ countries, with in-house experts. Experience is essential to cover the edge cases when managing compliance correctly. Getting compliance almost right, or right sometimes, has zero value.

• Buy. They consider acquiring a smaller player that already has the tech they want to offer next. However, integrating an acquisition is just as complex as integrating an external partner. It’s also not uncommon for buyers to discover the features they bought weren’t as comprehensive as they thought — and they’re still left with large gaps in their platform offering. 

• Partner. They decide to integrate with those that are already the best in class. For most companies, this is the only promising route to success here — embedding the compliance capabilities of a trusted partner, to augment their own capabilities.

The power of Embedded

Remote’s collaboration with Gusto is a key example of how partnerships work seamlessly for everyone — from the platform offering these services at the point of sale, to the end customer that gets their unicorn toolkit.

How a partnership could look

Gusto chose to partner with Remote Embedded to add global hiring capabilities to their platform. As a result, Gusto customers can hire international employees fully within the Gusto UX. This gives these customers the ability to compliantly hire and pay international employees in one platform, without needing any country specific expertise on their end.

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Move faster with clever, intuitive integrations

To be a winner in the HR tech stack consolidation game, you cannot be without powerful global hiring and payroll functions; an embedded approach is key.

To learn more about Remote Embedded, book a free walkthrough with one of our friendly experts. It really is possible to have it all — in one streamlined platform.