By Scott Thomson – Managing Director, Links International
How do we process our Asia payroll using Workday?
We work with a lot of Hong Kong and Singapore HR teams implementing Workday across Asia and this is the first question HR teams ask! The short answer is that Workday does not have payroll software for countries in Asia (Workday payroll covers US, Canada, UK and France only). Instead Workday users with employees in Asia need to integrate Workday with a payroll services company in Asia or local payroll software to continue to process payroll in Asia (However, this information often isn’t communicated by headquarters!).
The reason why, is because of the product design of Workday. Workday HCM as a product is aimed at centralising all of your HR functionality in one system by pulling information from other specialist HR software and vendors where needed (e.g. integrating Workday with payroll providers). This approach of using multiple specialised HR software’s that integrate with each other is gaining popularity over a more traditional approach of using an all in one HR software that attempts to cater for all the HR challenges a business faces. Every business HR challenge is different, and combining different specialised HR software is being recognised as more flexible and effective than single software solutions.
This article is aimed at providing HR teams with an understanding of processing payroll in Asia when using Workday.
How do you integrate your Asia payroll with Workday?
Given Workday cannot be used to process Asia payroll, Workday users largely use one of the below options:
- Using a payroll outsourcing services company - Using a payroll services company in Asia who can integrate with Workday to process Asia payroll; or
- Buying local payroll systems and building Workday integrations in-house - Purchasing separate local payroll systems to run payroll in house and then building integrations with Workday.
Given the specialist technical knowledge needed to build a payroll integration, using a payroll services company is regularly recommended as best practice by Workday implementation consultants. In addition to the usual benefits of outsourcing payroll, the main benefits of using a payroll service company include being able to leverage their existing experience building Workday integrations and also their ability to cover multiple countries with one payroll system, (i.e. if your payroll covers more than 1-2 countries in Asia and you want to process payroll in house you will need to buy multiple payroll systems to cover all of your countries)
How do payroll providers integrate with Workday?
Workday market their payroll integration as Cloud Connect for TPP (Third Party Payroll) and encourage clients to develop a payroll integration which matches their Workday environment using Workday tools with the goal of ensuring a simpler integration build. Clients using Workday will typically use one of the following options for integrating Workday with their Asia payroll:
1. Point to Point Integration - Point to Point integration is a fully automated integration where information flows from Workday into the payroll company’s payroll system via a ‘Payroll Effective Change Interface’ file (PECI file). This means whenever a Workday user makes a change in Workday that will impact a payroll calculation (e.g. a salary increment, termination), this information will be sent from Workday in the PECI file to the payroll company’s payroll system when they calculate payroll.
- Efficiency – Payroll processing is automated and staff no longer need to provide monthly payroll variance information to the payroll services company in a specific format each month,
- Accuracy – all information comes directly from a single source of truth meaning more accurate payroll without human error, a faster payroll process means that payroll processing is based on close to live data.
How its developed - Under this option the payroll services company will assist the client to build the PECI file to contain the correct data and maps the data in the PECI file to the payroll services company’s payroll systems. Alternatively, the client’s Workday implementation consultant can build the integration based on a payroll company’s specifications and the payroll company will test the integration.
2. Manually import of PECI file – In the event that you don’t have a large enough headcount to justify building a point to point integration (see recommendation below) is to generate a Workday PECI file to the payroll service provider who then manually imports the data from the PECI spreadsheet into their payroll system.
- Cheaper than developing a point to point integration short term, however, the payroll services company is likely to charge you an extra service fee each month for the manual work involved with manually manipulating and importing the information. In summary, the manual file may be more expensive longer term and will not create the same efficiencies and accuracy benefits of the point to point integration above.
How many employee headcounts is enough to justify performing an payroll integration?
As a general rule and unless there are special circumstances, we generally recommend clients to only look at creating an automated integration if they have at least 300 headcount in the relevant country. Building an integration takes a lot of time and effort and the efficiency and accuracy benefits of an integration only really start to make sense when you have over 300 headcount.
What is the cost of building a Point to Point Integration with Workday?
The cost of building an integration depends on a number of factors including the quantity of data being transferred (e.g. payment codes, number of employees), the number of countries, whether you need information to flow back into Workday (e.g. GL file and pay history). Generally speaking a good payroll services company should be able to build an integration for 1 country in 1 – 3 months depending on the complexity.
Selecting a payroll service provider in Asia
When selecting a payroll processing provider in Asia, it’s important to do your homework and ensure your payroll processing provider is future-proof. Outside of your usual due diligence questions, payroll specific questions you should ask include:
- Workday integration – Can the payroll provider integrate with Workday? How long does it take them to complete an integration?
- Regional footprint – What is the payroll outsourcing provider’s regional footprint? Are they able to support you in most of the countries in which you have employees?
- In-country support – Does the payroll outsourcing provider’s support sit in country? Or is the support going to be offshored to cheaper locations, e.g. India or the Philippines?
- Data hosting and security – Where will the payroll data be hosted? How secure is the data? Is it GDPR compliant? Does the provider have the security accreditation, e.g. ISO27001?
Rolling out Workday in Asia? Talk to us now to understand how to integrate your payroll with Workday and transform your HR function. Contact us now.