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Excelity Global Exemplifies HRO M&A Activity in Asia Pacific

HRO has been one of the most active markets for acquisitions in recent years and 2015 was no exception, with ~30 acquisitions across all HRO service lines (up from 25 in 2014). M&A activity in benefits administration has remained high, while RPO acquisitions have become increasingly aggressive year-on-year. However, payroll M&As have also been ticking along nicely. One notable event was Everstone Capital’s acquisition of Aon Hewitt’s Asia Pacific payroll business for $60m, rebranded as Excelity Global.

Excelity Global is one of the leading Asia Pacific providers of payroll and HR outsourcing services, and Everstone, an India and South East Asia private equity and real estate investment company, plans to invest in Excelity Global for further growth in Asia Pacific and globally. Though a new name and brand, Excelity is an established provider with ~600 employees and ~400 clients across 17 countries in Asia Pacific. Formed in 1997 as Hewitt Associates, the company’s development in the region has seen various transformations, including:

  • Hewitt forming a JV with India Life, creating India Life Hewitt in 2003
  • Hewitt completing the acquisition of India Life in 2004, consolidating payroll processing centers, and starting payroll operations in China
  • Further expansion to Singapore (2005-8)
  • Aon Hewitt broadening its product portfolio for the APAC market in 2010, adding Workforce Administration as an offering
  • Signing its first WFA client in India in 2011, a leading chain of fast food restaurants
  • Expanding HRO services in 2012 to add regional payroll as an offering
  • Launching the myPay app for accessing payroll on mobile, and being certified as a Workday Global Payroll Cloud partner (2013-14).

Excelity’s service offerings extend beyond payroll administration, also including tax processing, benefits administration (including mandatory, supplemental and flexible benefits), employee data management, learning, performance management, and recruitment.

Excelity targets single-country, regional and global companies. Service delivery locations include Singapore, India (Bangalore, Gurgaon, Noida, Hyderabad, Pune, Chennai, Mumbai), China (Shanghai, Beijing, Shenzhen) and the Philippines. China is also used as a nearshore center for 100% of Japan’s service delivery. Based on NelsonHall analysis, Excelity is one of the largest payroll service providers in Asia Pacific in terms of payroll revenue. Excelity processes over 1 million pay slips per month across the APAC region, with a value of $5bn per annum.

Clients are across several industries, including a multinational pharma company in China for payroll, a local bank in Singapore for payroll administration, a large restaurant chain in India for workforce administration, and a business processing center in the Philippines for automated time tracking and leave system.

Payroll in Asia Pacific is proving to be a very active HRO market. NelsonHall’s 2015 global payroll market analysis study reveals that the multi-country payroll market continues to grow at ~3X the rate of the total market, and the highest growth rates are in Asia Pacific and Latin America.

Meanwhile, HRO M&A activity continues unabated, with four acquisitions in 2016 already. NelsonHall believes this is a trend that will continue, including acquisitions of all sizes of companies, though we expect to see mostly mid-size companies acquiring to expand their geographic footprint and their ability to deliver multi-country, regional and global services. We will also continue to see acquisitions by private equity investors. Another very recent Asia Pacific example is Talent2 agreeing to sell its managed services business to private equity partners 5 Value Capital, rebranding to Ascender, providing payroll and learning services. Both Ascender and Excelity Global are in the top 5 payroll providers in Asia Pacific by revenue.

Excelity’s first Cloud Services product, Payroll on Demand, will be launched in Q2 2016. Excelity will be launching a fully unified regional payroll platform and SaaS capability in eight additional countries in the APAC region in 2016. NelsonHall expects Everstone to invest in Excelity's Hire-to-Retire HCM platform, enhance its service offering, and expand regionally and globally within the next 1 – 2 years. 

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