2020-APAC-Payroll

HR-Payroll Consolidation in Asia-Pacific: Ceridian, Excelity and the Year of the Rat

In a world shaken first by a trade war between the U.S. and China and then a global pandemic, what was a strong appetite for mergers and acquisitions in Asia-Pacific (APAC) has largely been suspended to wait out the storm. Until now, that is. An uptick in M&A due diligence performed on APAC companies was registered in May, which is precisely when leading HR software and payroll provider Ceridian announced its intent to acquire regional payroll provider Excelity Global (Excelity). Just three short weeks later on May 29, the parties announced the acquisition was complete. 

In the Chinese zodiac, January 2020 began the Year of the Rat, which – contrary to its connotation for many as an urban pest – is associated in the zodiac with new beginnings and renewal. In this context, the rat is known for being inquisitive, shrewd and resourceful. It represents fertility, wealth and plenty, which makes it a fitting symbol for what we see as a year of growth and consolidation for payroll and HR in APAC.

Ceridian Acquires Excelity

Ceridian’s earliest dealings in multi-country payroll began as local one-off sub-contracts, followed between 2015 and 2018 with a dabbling into a coalition of providers that made up the European-led Payroll Services Alliance (PSA), including payroll provider Ascender as the partner covering APAC. By early 2019, when Ceridian launched its human capital management (HCM) software solution Dayforce in Australia, it had already soured on its alliance with payroll provider SDWorx and demonstrated a preference for Excelity Global as its “go to” payroll partner for APAC countries. 

A year into the Australia Dayforce roll out, Ceridian’s enthusiasm for growth in the region was further evidenced by adding capabilities with the September 2019 acquisition of RITEQ, whose workforce management solutions bring the company 325 new clients in Australia, New Zealand and the U.K.

By choosing Excelity, which has its own point solution for enterprise payroll – ePay – and small and medium businesses – ezPayroll – Ceridian adds clients that fit its long-term strategy to expand Dayforce around the world. With 70 percent of its client base in India, and the next largest payroll customers in China, Singapore, the Philippines and Malaysia, Excelity offers Ceridian considerable geographic expansion. Excelity also serves clients in eight other APAC countries with its own solutions and extends its reach with partner Socialynx in Japan, plus another seven countries served by in-country partners (ICPs).

Other Payroll Providers 

Global powerhouse ADP aside, several other payroll competitors hope to capitalize on growth and consolidation in the payroll market in the Far East. Foremost of these is regional heavyweight Ascender. An influx of recent investment by Ascender has led to significant modernization of its proprietary, multi-country platform PeoplePay as well as its 2017 acquisition of Australia/New Zealand’s popular Preceda payroll solution. Now, with fresh new platform in hand and 600 clients updated to new technology, Ascender is poised to position itself as the go-to partner for HR/payroll providers in the Americas and Europe that lack their own payroll operations in one or more APAC countries.

Ascender’s greatest competitors Ramco and Neeyamo are focused on their own proprietary platforms, combining a multi-country payroll engine, robust technology, and integrated time and absence features. Ramco’s growth is centered on APAC countries of all sizes, pushing the envelope in automation and a vision of “touchless” payroll. Meanwhile, Neeyamo targets clients with a long tail of small countries, which includes but is not limited to countries in APAC. Like many players in the region, Neeyamo has seen its client portfolio grow by nearly a quarter in the last two years, led by multi-nationals increasing presence in APAC countries.

Other fast-growing regional payroll players include PayAsia and Payroll2U – both with many Asian locations and a devoted focus on the Far East payroll market. As a result, they are popular as part of the ICP network of global payroll aggregators and most anyone with more than one country gap to fill. Curious Workday clients may be interested to learn more about lesser-known regional payroll partners, including CDP Group and i-Admin, both seeking to broaden their somewhat-limited footprints.

The Next Payroll Frontier

In the multi-country payroll (year of the) rat race, Middle East and Africa (MEA) countries may just be the next frontier. By grouping these countries with the continent of Africa, we avoid all sorts of confusing geographic divides that align North African countries with the Arab-speaking Middle East and leave others in south and west Africa to align with the U.K. or Europe. Corporations often lump them together with Europe to form an “EMEA” region, but payroll provider markets do not necessarily follow suit. 

Comprised of mostly small populations, MEA payroll customers have been brought into APAC payroll providers’ delivery models more easily than the European model, where focus is on large Western European countries, Turkey and the Nordics. With only a handful of niche payroll providers dedicated to the MEA countries, the scale is quite a bit smaller with less maturity in the technology, controls and centralized delivery model. As global companies push for growth in emerging markets, watch for APAC payroll providers to increase services to United Arab Emirates, Oman, South Africa, Uganda and Turkey, alongside their services to China and other Far East countries. 

Racing to Finish Strong

Much like the mythological race dating back 2,000+ years ago in China that set the zodiac calendar, today’s competition to be first and best in the HR-payroll provider kingdom is fierce. Although versions of the zodiac story vary from one country to the next, the victor recognized across all of Asia for its cunning is the rat, who crossed the river on the head of another animal to overcome his inability to swim. 

Heavily concentrated in India and a handful of other countries, Ceridian’s acquisition of Excelity does not immediately make it the winner of the race, though competitors vying for position have noted they expect the newly merged company will be a more frequent competitor once it is integrated. Will Ceridian’s early leap to secure greater payroll presence in APAC be blessed with good fortune and new beginnings in the Year of the Rat? Regardless, the speedy and decisive move to close the acquisition is a breath of fresh air to a region and a world recently overshadowed by pandemic.

Echoing the resounding enthusiasm for a rapidly growing APAC market, Neeyamo’s Chief Client Partner Vivek Khanna emphasized “this market is so huge that all players have a place.” Much like the mythical race to earn a top spot on the zodiac, the HR-payroll race is on – may the best competitor(s) win!

Contact us to discuss your growth in APAC and the fit of various providers for consolidated payroll, automation, and compliance.

About the author

With more than 25 years of industry and consulting experience, Julie is an invaluable advisor for enterprises needing to evaluate and assess alternatives for multi-process HR service delivery, including workforce administration, payroll, benefits, compensation, recruiting, technology, learning, and talent management. Julie leads complex global HR assessments and transactions around the world. Prior to joining ISG, Julie worked for nearly a decade as an independent consultant, providing market research, vendor assessments, systems testing and implementation consulting to a broad community of benefits administration vendors and human resources departments. Julie started her career in human resources outsourcing, establishing shared service centers for a national benefits consulting and administration firm. She is a well-published thought leader in her field.