NEAT EVALUATION FOR EXCELITY GLOBAL:

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1 NEAT EVALUATION FOR EXCELITY GLOBAL: Payroll Services Market Segments: Overall, Multi-Country Focus, Technology & UX Focus, HR Cloud Integration Focus, Analytics & Reporting Focus Introduction This is a custom report for Excelity Global presenting the findings of the NelsonHall NEAT vendor evaluation for Payroll Services in all market segments (Overall, Multi-Country Focus, Technology & UX Focus, HR Cloud Integration Focus, and Analytics & Reporting Focus). It contains the NEAT graphs of vendor performance, a summary vendor analysis of Excelity in payroll services, and the latest market analysis summary for payroll services. This NelsonHall Vendor Evaluation & Assessment Tool (NEAT) analyzes the performance of vendors offering payroll services. The NEAT tool allows strategic sourcing managers to assess the capability of vendors across a range of criteria and business situations and identify the best performing vendors overall, and with a specific focus on multi-country capability, technology & UX, integration with HR cloud, and analytics & reporting. Evaluating vendors on both their ability to deliver immediate benefit and their ability to meet client future requirements, vendors are identified in one of four categories: Leaders, High Achievers, Innovators, and Major Players. Vendors evaluated for this NEAT are activpayroll, ADP, AscentHR, Capita, Ceridian, CloudPay, Excelity Global, GlobePayroll, IBM, Infosys, MHR, Neeyamo, NGA HR, OneSource Virtual, Paychex, Raet, Ramco Systems, SafeGuard World International, SD Worx, Sopra Steria, TMF Group, and Zalaris. Further explanation of the NEAT methodology is included at the end of the report. NelsonHall January 2018

2 NEAT Evaluation: Payroll Services (Overall) NelsonHall has identified Excelity as a Leader in the Overall market segment, as shown in the NEAT graph. This market segment reflects Excelity s overall ability to meet future client requirements as well as delivering immediate benefits to payroll services clients. Leaders are vendors that exhibit both a high ability relative to their peers to deliver immediate benefit and a high capability relative to their peers to meet client future requirements. Buy-side organizations can access the Payroll Services NEAT tool (Overall) here. NelsonHall January 2018

3 NEAT Evaluation: Payroll Services (Multi-Country Focus) NelsonHall has identified Excelity as a Leader in the Multi-Country Focus market segment, as shown in the NEAT graph. This market segment reflects Excelity s ability to meet future client requirements as well as delivering immediate benefits to payroll services clients with a specific focus on multi-country capability. Buy-side organizations can access the Payroll Services NEAT tool (Multi-Country Focus) here. NelsonHall January 2018

4 NEAT Evaluation: Payroll Services (Technology & UX Focus) NelsonHall has identified Excelity as a Leader in the Technology & UX Focus market segment, as shown in the NEAT graph. This market segment reflects Excelity s ability to meet future client requirements as well as delivering immediate benefits to payroll services clients with a specific focus on payroll technology and user experience. Buy-side organizations can access the Payroll Services NEAT tool (Technology & UX Focus) here. NelsonHall January 2018

5 NEAT Evaluation: Payroll Services (HR Cloud Integration Focus) NelsonHall has identified Excelity as a Leader in the HR Cloud Integration Focus market segment, as shown in the NEAT graph. This market segment reflects Excelity s ability to meet future client requirements as well as delivering immediate benefits to payroll services clients with a specific focus on cloud integration with the broader HR function. Buy-side organizations can access the Payroll Services NEAT tool (HR Cloud Integration Focus) here. NelsonHall January 2018

6 NEAT Evaluation: Payroll Services (Analytics & Reporting Focus) NelsonHall has identified Excelity as a Leader in the Analytics & Reporting Focus market segment, as shown in the NEAT graph. This market segment reflects Excelity s ability to meet future client requirements as well as delivering immediate benefits to payroll services clients with a specific focus on analytics and reporting capability. Leaders are vendors that exhibit both a high ability relative to their peers to deliver immediate benefit and a high capability relative to their peers to meet client future requirements. Buy-side organizations can access the Payroll Services NEAT tool (Analytics & Reporting Focus) here. NelsonHall January 2018

7 Vendor Analysis Summary for Excelity Global Overview Singapore headquartered Excelity Global (Excelity) was formed in 2015, following Everstone Capital s acquisition of Aon Hewitt s Asia Pacific payroll business. Since its inception, Excelity Global has continued to grow and improve its position both in the Asia Pacific region and globally as a leading multi-country payroll provider. Today, Excelity is one of the leading payroll service providers in Asia Pacific, in terms of payroll revenue. With over 450 clients, Excelity now serves ~1.2m employees across 20 countries, with a payroll value of $50bn annually, and growing. Excelity operates as an Asia Pacific only payroll services business, offering one of the most extensive geographic coverages in the region through its proprietary platform. Excelity s service offerings across the outsourcing space include: Payroll administration Tax processing Benefits administration: including mandatory and supplemental flexible benefits Regional payroll CoreHR (EDM) Workforce administration: full employee lifecycle administration including employee data management, learning and performance management, and recruitment. Excelity has ~459 clients in the APAC region, ~65% of which are in India; with the remaining ~35% across Singapore, China, Philippines, Australia and other APAC countries. Approximately 47% of its clients are on payroll contracts, with the remaining 53% incorporating other HRO services including benefits administration and workforce management. Excelity s client base primarily consists of small to mid-size businesses, the vast majority of which are based in India. However, despite the small number of clients which Excelity has in the large enterprise space, this represents 22% of its overall revenues. Excelity provides payroll processing capability for single country and multi-country payroll clients. In India, it also provides all tax details/tax processing for employees. Excelity has its own proprietary technology which it uses to administer payroll across its entire client base. It is a Workday global payroll cloud partner and is able to interface its payroll with a number of cloud and on-premise technologies including SuccessFactors, Workday, and Oracle, to provide data feeds to these systems. Excelity targets single country, regional, and global businesses and has service delivery locations in Singapore, India (Bangalore, Gurgaon, Noida, Hyderabad, Pune, Chennai, Mumbai), China (Shanghai, Beijing, Shenzhen), the Philippines, and Malaysia. China is also used as a nearshore center for all Japanese service delivery. Excelity operates across several verticals, although the highest proportion of revenues comes from technology, financial services, manufacturing, consumer products, and pharmaceuticals. NelsonHall January 2018

8 Financials NelsonHall estimates that Excelity s CY 2016 payroll-related revenues were ~$24m. Excelity's revenues are derived solely from the APAC region. Strengths Good foothold in India, with 459 clients across the Asia Pacific region. With its capability to provide multi-country payroll processing, this puts it in a good position to expand these relationships and deliver services in neighboring APAC countries Excelity offers one of the most extensive proprietary platforms in the APAC region, covering 13 countries and planning further expansion to 15 in CY 2018 With the evolution of its ezpayroll cloud based payroll offering, Excelity has the chance to gain additional penetration in organizations needing a payroll solution, initially in a single country. As its experience and its product offering strengthens over time, with localized client wins, it will start to get the attention of multinationals which are seeking a standardized payroll platform across the entire APAC region Excelity s certified partner relationship with Workday will help to accelerate its growth in the APAC region, particularly given Workday s roadmap to increase its presence in APAC Its multi-country cloud payroll offering will be appealing to fast growing companies in the APAC region, due to its relatively low cost and quick implementation times Excelity s payroll services capability also fuels its multi-process HR service offering, given the growing trend for companies to buy payroll and other multi-process HR services as a bundled package Onshore delivery capability across India, Singapore, Philippines, Malaysia, and China Established CoE for automation, knowledge management, and account management across APAC Strong commitment to multi-country payroll with nearly ~40% of revenues derived from its multi-country payroll services offering (which remains its strongest revenue stream). Challenges Limited payroll services in countries outside the APAC region, and no capability in other international regions including EMEA or the Americas Process scalability across clients is currently challenging, as Excelity tends to operate in line with clients requirements, and not to a standardized process framework Limited language capability Limited technology integration experience with other HR cloud platforms besides Workday. NelsonHall January 2018

9 Strategic Direction During the next months, Excelity s is focusing on building out its service and technology offering, whilst also expanding its reach into new geographies, particularly in the APAC region. Key areas of focus include: Continued investments in payroll platforms and technology enhancements (20%-25% of its revenues are invested annually): Continued development of integrations to leading HCM platforms - it is a Workday global payroll cloud partner and is able to interface its payroll with a number of cloud and on-premise technologies including SuccessFactors, Workday, and Oracle, to provide data feeds to these systems. Country expansion for ezpayroll (launched in 2017) is currently configured to support 12 APAC countries: India, Singapore, Hong Kong, China, Philippines, Japan, Indonesia, Thailand, Taiwan, Australia, New Zealand, Malaysia. It is planning expansion to Korea and Vietnam in Investments in and deployment of advanced automation initiatives throughout the delivery model and payroll process, including RPA, AI for payroll processing and validation automation, chatbots for servicing employee HR/payroll enquiries, and cognitive features to improve efficiency and analytics Excelity's analytic capability is in continual development, with its core offering focused more on providing standard reporting functionality. It cannot yet provide real-time dashboard based analytics, but this is an area of development and investment. However, Excelity has invested in and is actively developing its analytic capability and intends to roll out predictive analytics by the end of 2017 Geographic expansion across APAC, supported by additional country coverage in ezpayroll (Korea and Vietnam are planned for 2018) but also in conjunction with new partners, to supplement Excelity's capability Expanding its partner/reseller program. Leading banks in the APAC region are working with Excelity to offer ezpayroll as a complementary business service to their small business clients (PEPM fees are paid by the bank on behalf of its users). Excelity is also partnering with various platform providers such as Xero, SAP SuccessFactors, etc. to offer payroll to clients on these platforms. Excelity expects this initiative to drive rapid growth for the ezpayroll platform across the region. Outlook Excelity will continue to be one of the largest payroll providers in the APAC region, supporting payroll in 20 countries, with delivery centers in five countries and a partnership network to support additional countries. Its continued investments in growing regional capability across the APAC region will put Excelity in a strong position to focus its efforts on selling a greater proportion of multi-country and multi-process HCM deals. NelsonHall anticipates that Excelity will look to acquire local payroll providers in its target regions, to grow and scale its capability. NelsonHall expects that Excelity will also continue to leverage its partner network to expand its service offering. Key growth areas are expected to NelsonHall January 2018

10 be Malaysia, Indonesia, Thailand, Japan, and Australia. It is likely that Excelity will increase its penetration of clients buying MPHRO services, which currently makes up 53% of its business. Excelity will look to its ezpayroll SaaS product as its primary payroll platform and will continue to invest in expanding its capability regionally (Korea and Vietnam planned by 2018). NelsonHall anticipates that growth in this product will mostly derive from its smaller client base, which sees the cloud solution as a cost effective and light touch implementation alternative to broader HCM platform deployment. Further growth and adoption of ezpayroll will be driven by Excelity's reseller program, (e.g. partnerships with regional banks which are offering the platform to their business customers as a complementary service, with fees paid by the banks). Its continued investments in technology, particularly in RPA/AI, chatbots, analytics, and mobile-enabled software, will resonate with clients looking to improve their payroll service and technology. In addition, it is likely that Excelity will look to leverage its certified Workday partnership in the enterprise space, as Workday builds out its presence in the APAC region. Through a variety of initiatives, Excelity aims to make payroll processing and HR management a simpler, more streamlined experience for existing and potential clients. Excelity has aggressive growth plans, with revenues for the next four years expected to double. NelsonHall expects revenue growth of 15%-20% y/y in NelsonHall January 2018

11 Payroll Services Market Summary Overview Key criteria for vendor selection in payroll services include proven capability and relationships with clients, and the ability to reference clients in the same industry, size, and level of complexity. Additionally, cost is front of mind, and the solution must provide value beyond basic cost savings; cost must be outweighed by the value the solution delivers. Buyers are seeking best in class technology-enabled payroll services delivered on leading cloud technology, with the ability to provide real-time predictive analytic reporting capability. Apprehension about moving to an outsourced model and cloud based platforms has eased, though vendors still experience significant challenges relating to change management and the perception that the change associated will be too impactful to operations. While SaaS models have eased pressure on client business cases, justifying the cost of vendor services remains a challenge, especially for clients transforming their operations from a legacy in-house model. In what is becoming a reasonably crowded marketplace (with many different service provider options, technologies, and varying degrees of capability across key client criteria), it is becoming increasingly difficult for vendors to differentiate themselves, their service, and their product offerings. Buy-Side Dynamics Organizations continue to seek digital transformation, with cloud technology the key to realizing the change required to remain competitive. This is increasingly critical for HR, where the workforce is more diverse, dispersed, and technology savvy than ever before. This sector requires HR and payroll platforms that drive standardization and engage employees, by improving the user experience throughout the delivery model. The drive toward digital transformation has created a convergence, for HR and payroll to address technology jointly. Buyers are now much more focused on technology first, services second, with a demand for technology based managed payroll services increasing. Traditional bureau payroll service market is declining as buyers are seeking technology based managed payroll services, with a comprehensive cloud technology that aligns to their HCM strategy. Global HR/payroll organizations are seeing regulatory changes becoming more complex, demanding, and difficult to maintain compliance with (e.g. GDPR, ACA, etc.). Payroll processing remains a manual process; buyers are seeking advanced automation capability to increase efficiency and effectiveness across the delivery model. Cost pressures continue to drive the need for a more reliable, manageable, and scalable payroll model with predictable operating cost. Analytics, leveraging historically rich payroll data, has become a must-have tool to increase business insight, allowing payroll to shift from simple processor to strategic business partner. Leading inhibitors to payroll outsourcing center on the change impact to operations, and a lack of value realization or business case. Furthermore, a reluctance to release control to a third-party vendor, irrespective of any efficiency gains or other benefits is an inhibitor; complacency or comfort with existing solutions/vendors is also a factor. NelsonHall January 2018

12 Market Size & Growth In 2016, the global payroll services market was estimated at ~$17.3bn, with partial services accounting for ~3/4 of the market. The global payroll services market is predicted to grow at 4.1% CAAGR, and will be ~$21bn in Single and multi-country contracts make up ~83% of the market, with multi-region and global contracts growing, as organizations of all sizes seek to achieve global payroll transformation. Middle-market organizations remain the largest adopters of managed payroll services, while traction with large market organizations is increasing. The manufacturing sector accounts for ~1/3 of the payroll market value; high growth is expected from the hospitality and travel sectors. Vendor geographical growth and expansion is focused on solutions for emerging markets: Latin America, Asia Pacific, and Middle East/Africa. Outlook Over the next few years: Multi-country payroll will grow at nearly 4x the rate of single country services, with a 21% share of the overall market by 2021 As cloud transformation matures and multinational organizations recognize the need to digitize operating models in order to remain competitive, large market organization adoption for cloud based managed payroll services will become more prevalent Technology based payroll services will be standard across the payroll vendor landscape; buyers will seek vendors which can offer both leading technology and value-added services The use of intelligent technology in payroll will be standard, with vendors differentiating themselves through innovation with advanced automation such as machine learning and cognitive capabilities The use of analytics in payroll delivery will center on predictive capability, and data-asa-service offerings will gain in popularity as vendors will seek to commoditize analytic investments Compliance challenges will continue to increase in volume and complexity; vendors will see increased traction for services from prospective clients seeking expert support to manage the risks associated with operating globally Organizations will seek to leverage more onshore delivery models, in an effort to enhance the employee experience through more customized support, driven by incountry expertise Vendors will continue to innovate with enablers to make the move to cloud faster, simpler, and more manageable, easing change impacts and the concerns of hesitant adopters. NelsonHall January 2018

13 NEAT Methodology for Payroll Services NelsonHall s (vendor) Evaluation & Assessment Tool (NEAT) is a method by which strategic sourcing managers can evaluate outsourcing vendors and is part of NelsonHall's Speed-to- Source initiative. The NEAT tool sits at the front-end of the vendor screening process and consists of a two-axis model: assessing vendors against their ability to deliver immediate benefit to buy-side organizations and their ability to meet client future requirements. The latter axis is a pragmatic assessment of the vendor's ability to take clients on an innovation journey over the lifetime of their next contract. The ability to deliver immediate benefit assessment is based on the criteria shown in Exhibit 1, typically reflecting the current maturity of the vendor s offerings, delivery capability, benefits achievement on behalf of clients, and customer presence. The ability to meet client future requirements assessment is based on the criteria shown in Exhibit 2, and provides a measure of the extent to which the supplier is well-positioned to support the customer journey over the life of a contract. This includes criteria such as the level of partnership established with clients, the mechanisms in place to drive innovation, the level of investment in the service, and the financial stability of the vendor. The vendors covered in NelsonHall NEAT projects are typically the leaders in their fields. However, within this context, the categorization of vendors within NelsonHall NEAT projects is as follows: Leaders: vendors that exhibit both a high ability relative to their peers to deliver immediate benefit and a high capability relative to their peers to meet client future requirements High Achievers: vendors that exhibit a high ability relative to their peers to deliver immediate benefit but have scope to enhance their ability to meet client future requirements Innovators: vendors that exhibit a high capability relative to their peers to meet client future requirements but have scope to enhance their ability to deliver immediate benefit Major Players: other significant vendors for this service type. The scoring of the vendors is based on a combination of analyst assessment, principally around measurements of the ability to deliver immediate benefit; and feedback from interviewing of vendor clients, principally in support of measurements of levels of partnership and ability to meet future client requirements. NelsonHall January 2018

14 Exhibit 1 Ability to deliver immediate benefit : Assessment criteria Assessment Category Offerings Delivery Presence Assessment Criteria Payroll SaaS capability Payroll BPS capability Range of payroll processes covered Payroll compliance delivery maturity Extent of mobile functionality Scalability of payroll technology Application of analytics Usability & end-to-end process experience Adaptability of configuration Interfaces/integration with HR cloud platforms Integration of payroll with Workday Integration of payroll with SuccessFactors Payroll services plus cloud HR platform capability Payroll service capability using major cloud HR platforms Cloud HR platform application management capability Multi-country reporting service Willingness to take over client payroll operations Ability to offer HR services U.S. U.K. Continental Europe Rest of EMEA APAC LATAM Application of payroll benchmarking & roadmap Multi-country payroll delivery Payroll process change management capability Use of RPA/automation tools Overall client presence Large company presence (over 15K employees) Mid company presence (500-15K employees) Small company presence (under 500 employees) U.S. U.K. Continental Europe Rest of EMEA APAC LATAM Continued NelsonHall January 2018

15 Continued Benefits Achieved Level of cost savings Improved self-service Speed to apply regulations Single view of payroll across organization Increased standardization of payroll across countries Single governance Exhibit 2 Ability to meet client future requirements : Assessment criteria Assessment Category Service Culture Level of Investments Market Momentum Assessment Criteria Perceived suitability to meet future client needs Mechanisms in place to deliver client innovation Partnership approach Service culture Achievement of service & delivery innovation In payroll technology development In payroll operations development In HR cloud integration In developing payroll capability based on major HR cloud platform In developing combined proprietary payroll services & HR cloud Level of focus on analytics & payroll reporting Level of focus on client-specific end-to-end user experience In multi-country payroll Payroll market momentum For more information on other NelsonHall NEAT evaluations, please contact the NelsonHall relationship manager listed below. research.nelson-hall.com Sales Enquiries NelsonHall will be pleased to discuss how we can bring benefit to your organization. You can contact us via the following relationship manager: Guy Saunders at guy.saunders@nelson-hall.com Important Notice Copyright 2017 by NelsonHall. All rights reserved. No part of the publication may be reproduced or distributed in any form, or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. The information provided in this report shall be used only by the employees of and within the current corporate structure of NelsonHall s clients, and will not be disclosed to any other organization or person including parent, subsidiary, or affiliated organization without prior written consent of NelsonHall. NelsonHall exercises its best efforts in preparation of the information provided in this report and believes the information contained herein to be accurate. However, NelsonHall shall have no liability for any loss or expense that may result from incompleteness or inaccuracy of the information provided. NelsonHall January 2018