Paychex Expands Its Software-As-A-Service Based Solutions By Acquiring Nettime

Paychex (NASDAQ:PAYX), a leading payroll and HR service provider in the U.S., recently acquired nettime solutions, a cloud-based time and attendance solutions provider. ^[1] This acquisition adds to Paychex’s existing Software-As-A-Service (SaaS) solutions portfolio which includes SurePayroll, ExpenseWire and myStaffingPro.

Nettime solutions has been offering SaaS based time and attendance solutions since 2008. It has performed well in the past with its revenue growing 52% from 2009 to 2012. Its 2012 revenue stood at $4.7 million. ^[2] For Paychex, whose revenue in 2012 was $2.2 billion, nettime solutions’ revenue is not of any significance. Paychex has acquired nettime primarily to enhance its SaaS product line and to cater to the time and attendance management requirement for small and medium businesses.

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Nettime’s stratustime will help increase Paychex’s number of clients

Time and attendance management forms an integral part of payroll and workforce management in a company. Therefore it is important to effectively manage and accurately record timestamps for an employee’s clock-in and clock-out times. Time and attendance management also helps in maintaining compliance with federal and state labor laws.

With nettime’s SaaS based solution, stratustime, Paychex will be able to offer its clients a way to automate the entire time and attendance management function, thereby eliminating the need to hire a professional to manage the function and also reduce the possibility of errors. Stratustime effectively integrates the time and attendance and payroll functions thereby reducing the time required to prepare and process payroll checks. Additionally, clients and their employees will be able to access stratustime from any location and mark attendance and request for leaves.

Offering stratustime will help Paychex attract new clients since it will help clients reduce costs and effectively manage the time and attendance function. Stratustime also has the ability to manage time and attendance at multiple locations. This will be particularly attractive for clients who are present in multiple locations in different parts of the U.S. and the world.

SaaS based solutions will help improve margins and remain competitive

SaaS based solutions are gaining eminence in the payroll and HR services industry due to the convenience of using such products. Clients can access these services from any remote location through an internet enabled device. Therefore it is important that Paychex has such products in its portfolio as well. This will also help Paychex remain competitive with other players in the industry. Paychex’s competitors, Automatic Data Processing (NASDAQ:ADP) and Intuit (NASDAQ:INTU), already have significant presence in SaaS based solutions market.

Additionally, Paychex will benefit from reduction in costs which will lead to improved margins. SaaS based solutions eliminate the need to hire professionals to help clients manage their payroll and HR responsibilities. As more and more clients shift to these online services, labor costs for Paychex will decrease and help in improving margins. Also, since the service is online, scaling up the service will be easier and would not require intensive capital expenditures.

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1. Paychex Acquires Leading Cloud-based Time and Attendance Company nettime solutions, June 17 2014, www.paychex.com [↩]
2. nettime solutions – company profile, www.inc.com [↩]