{"id":446,"date":"2023-09-28T13:19:38","date_gmt":"2023-09-28T20:19:38","guid":{"rendered":"https:\/\/embedded.gusto.com\/blog\/?p=446"},"modified":"2023-10-05T07:31:30","modified_gmt":"2023-10-05T14:31:30","slug":"design-and-build-payroll-for-saas-gusto-embeddeds-insights","status":"publish","type":"post","link":"https:\/\/embedded.gusto.com\/blog\/design-and-build-payroll-for-saas-gusto-embeddeds-insights\/","title":{"rendered":"Building Embedded Payroll for SaaS: Gusto Embedded’s Insights"},"content":{"rendered":"

Innovative SaaS solutions continue to reshape payroll management, which remains a challenge for many small and medium-sized businesses (SMBs). The payroll software market \u2014 valued at $16 billion today \u2014 is growing rapidly and is projected to reach $46.6 billion by 2028. However, SaaS platforms find it challenging to navigate the opportunity to design and build payroll without the right partner.<\/span><\/p>\n

Listen to the webinar recording for \u2018Designing and Building Embedded Payroll for SaaS Applications\u2019 (20 mins) in full here.<\/a><\/span><\/p>\n

Market Fragmentation and Greenfield Opportunities<\/h2>\n

However, it’s crucial to note that this market is significantly fragmented. The top 10 players constitute only 55% of the market share, leaving 99% of providers to vie for the remaining 45%. This stark contrast to the accounting industry, where the top 10 providers dominate 95% of the market, presents a unique opportunity for new entrants.\u00a0<\/span><\/p>\n

Additionally, many SMBs still calculate payroll by hand or work with local accountants. These same businesses continue to digitize their business management systems, often hand-in-hand with the rise of modern, purpose-built SaaS solutions that meet their specific needs without requiring a large IT investment for integration. Embedded payroll enhances these solutions and makes it easier for business owners to make the switch to relying on software.<\/span><\/p>\n

Designing Products That Customers Want From The Start<\/h2>\n

At Gusto, we have spent more than a decade navigating SMB requirements for payroll and HR. The decision to launch Gusto Embedded<\/a> was grounded in feedback from customers, partners, and our own market research.\u00a0<\/span><\/p>\n

That research demonstrated that while reliability, ease of use, and best-in-class customer support remain priorities, SMBs seek specialized solutions tailored to their unique customer needs. This shift, accelerated by the move to remote work, has redirected the focus of employee experience initiatives from physical office settings to software-driven solutions. While innovative embedded technologies empower the development of highly personalized payroll experiences, many partners must grasp the intricacies of constructing payroll solutions.<\/span><\/p>\n

“Our partners often underestimate the complexities of building payroll. They need to consider who their solution caters to, whether it’s a unique problem solver, and how quickly users will see the benefits.”<\/span><\/p>\n

Yi Liu
\n<\/b>General Manager, Gusto Embedded<\/span><\/p><\/blockquote>\n

Navigating Common Challenges and Missteps<\/h2>\n

The challenges some early adopters face of embedded payroll highlights the importance of choosing the right approach to building in-app solutions. In one case, a prominent player in the accounting industry attempted to build its payroll back end from scratch. Despite their substantial resources, they soon realized that the project required more budget, patience, and expertise than they possessed. After wasting time and money, they ultimately abandoned the initiative in favor of integration with an external payroll provider (Gusto).<\/span><\/p>\n

In contrast, a smaller private company with 500 employees, although a market leader in HR tech software with over 20,000 customers, opted for a white-labeled integration approach. However, this choice led to an isolated product experience that fell short in terms of customer support and user satisfaction. After investing significant time and resources in evaluation, training, and marketing efforts, they struggled to onboard new customers and eventually discontinued their payroll product.<\/span><\/p>\n

These stories emphasize the importance of selecting the right infrastructure when venturing into payroll solutions. The consequences of choosing the wrong partner can be substantial, including damaged brand reputation, wasted investments, and a loss of trust from customers. Therefore, it is vital for partners to make informed decisions to ensure the success and sustainability of their payroll business.<\/span><\/p>\n

“When choosing a partner, you need to think about your brand’s reputation, the wasted investment, and the trust of your customers. It takes a long time to build trust but only a short time to lose it,”<\/span><\/p>\n

Yi Liu
\n<\/b>General Manager, Gusto Embedded<\/span><\/p><\/blockquote>\n

Supporting Your Payroll Business<\/h2>\n

To build a thriving payroll business, partners must engage key stakeholders and emphasize that they are creating a comprehensive payroll business, not just a product. This includes:<\/span><\/p>\n