B2B Payments

Sage Sells Off US Payroll Operations In Cloud Push

Small business (SMB) cloud solutions provider Sage is refocusing away from payroll as it divested its U.S. assets for $100.3 million, Reuters reported on Tuesday (Jan. 15).

Sage’s payroll outsourcing unit in the U.S. posted a $1.28 million loss last year, reports noted. Human resources (HR) management company iSolved HCM, based in the U.S., will acquire the assets.

According to Sage, it plans to use the proceeds from the sale to reduce debt, while the divestiture also signals a refocus on its cloud and subscription services for SMBs. The company also plans to close the deal within the next three month, and said it expects to post a $29.5 million profit upon completion, reports said.

Sage first entered the payroll market in 2015 with the launch of the Sage Payroll Center, enabling its small business accountant users to introduce payroll services for their own business clients.

“Payroll is a natural extension of the tax, audit and other financial services accountants already provide to their small and medium business clients,” said the firm’s Accountant Solutions Vice President Ray Barlow in a statement at the time, adding that the Sage Payroll Center aimed to help accountants introduce additional revenue streams.

However, the company has been investing more into its cloud operations as of late. Sage CEO Steve Hare spoke during an earnings call last November, warning that the company’s continued cloud migration is likely to slow growth in the short term.

“Cloud and emerging technologies are moving quickly, and we need to invest to make sure we can stay ahead in terms of what we can offer our customers,” said Hare in November.

The company revealed plans to invest $77 million into its cloud migration, and to boost its subscription offerings.

Hare took up the post as CEO after the departure of the firm’s previous CEO, Stephen Kelly, last year.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.