The number of HR teams in Asia using SuccessFactors has increased significantly in the last 2 – 3 years as a result of companies undertaking HR transformation initiatives.
One of the first questions we are asked when working with Hong Kong, Singapore and China-based HR teams implementing SuccessFactors is how they can perform payroll in SuccessFactors for Asia? The quick answer is that SuccessFactors itself does not support payroll countries in Asia. Instead, SuccessFactors clients with employees in Asia either need to:
- Purchase SAP’s Employee Central based payroll solution and integrate this
- Integrate SuccessFactors with a payroll services company in Asia or utilise local payroll software to continue to process payroll in Asia
Before being acquired by SAP in 2012, SuccessFactors was developed with the intention of being a cloud-based human capital management system. It was aimed at enabling HR users to manage core HR and ‘higher value’ talent management activities from one cloud-based system. As such, SuccessFactors doesn’t have a native payroll solution and focuses on the development of these high-level features and instead looks to integrate with other specialist systems/vendors for specialist and country-specific tasks like payroll.
This approach of using multiple specialised HR softwares 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 to all the HR challenges a business face. This blog is aimed at helping Asia based HR teams gain an understanding of how to process payroll for Hong Kong, Singapore, China, and Asia based employees when using SuccessFactors.
How Do You Process Your Asia Payroll With SuccessFactors?
As SuccessFactors cannot be used to process Asia payroll, SuccessFactors users largely use one of the below options:
- Buying SAP Employee Central Payroll and building a SuccessFactors: SAP Employee Central Payroll integration in-house
- Using a payroll services company to develop an integration with your SuccessFactors and process your payroll
Given the specialist technical knowledge needed to 1) process payroll in multiple countries across Asia and develop a smooth payroll integration and 2) the cost associated with purchasing and maintain SAP Employee Central Payroll, SuccessFactors implementation consultants including the Big 4 accounting firms will generally recommend SuccessFactors clients to utilise a payroll outsourcing company as the best way of establishing a cost-effective, robust and scalable payroll model that supports growth.
In addition to the usual benefits of outsourcing payroll, using a payroll service company with SuccessFactors enables HR teams to leverage the payroll service company’s existing technology and experience developing SuccessFactors integrations and also their ability to cover multiple countries with one payroll solution. As background, if your payroll relates to more than 1-2 countries in Asia and you want to process payroll in-house without using SAP Employee Central based payroll, you will likely need to buy or customise multiple payroll systems to cover all of your countries if you go down the in house path.
How Do Payroll Providers Integrate With SuccessFactors?
Clients using SuccessFactors will typically use one of the following options for integrating SuccessFactors with their Asia payroll:
1. Automated File transfer or API based payroll integration – Generally speaking an experienced payroll services company will have an integration tool with universal file formats leveraging on previous integrations. For security and data accuracy, this will usually be a fully automated integration where payroll related data will flow from SuccessFactors into the payroll company’s payroll system via file transfer or the payroll company calling the information from SuccessFactors using web service/Simple Object Access Protocol SOAP.
In simple terms, this means whenever a SuccessFactors client makes a change in SuccessFactors that will impact a payroll calculation (e.g. a salary increment, bonus or other variables), the data or updated information will be sent from SuccessFactors to the payroll company’s payroll system before payroll is calculated.
Benefits of developing/ having an integration tool
- Efficiency – Payroll processing is automated and staff no longer need to provide monthly payroll variance information to the payroll services company in a manual or specific format each month. In addition, information can flow to the payroll services company’s rule-based engine to automate complex payroll calculations
- Accuracy – integration is one of the best ways to pay large headcounts of employees accurately. 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 the integration is developed – Under this option the payroll services company will assist the client to configure the interface between their integration tools and SuccessFactors. Alternatively, the client’s SuccessFactors implementation consultant can build the integration files based on a payroll company’s specifications and the payroll company will test the integration.
2. Manually import of payroll files – 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 SuccessFactors PECI file to the payroll service provider who then manually imports the data from the PECI spreadsheet into their payroll system.
Benefits of sticking to manual files
- 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 remapping and importing your manual files. In short, the manual file will probably be more expensive in the long run and potentially be prone to human error. As such, it is generally used when the number of employee headcount is low.
What Is the Cost of Building a Payroll Integration With SuccessFactors?
The investment associated with developing a SuccessFactors payroll integration depends on various factors including the range of countries, quantity of data being interfaced (e.g. wage codes, number of employees), the number of countries, whether you need the information to integrate back into SuccessFactors (e.g. GL file and pay history). On a high level, a payroll services company familiar with SuccessFactors payroll integration will develop an integration for multiple countries in 1 – 2 months.
Choosing a Payroll Services Company in Asia
It’s important to do your homework and ensure your payroll plans and model is future-proof when choosing a payroll provider in Asia. In addition to your usual due diligence questions, payroll specific questions you should ask include:
- SuccessFactors integration – Can the payroll provider integrate with SuccessFactors?
- 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 – If my HR team and employees have questions, who will be there to answer them? Is the support in-country or is the support going to be offshored to cheaper locations, e.g. India or the Philippines?
- Hosting and security – Will the payroll provider pass my information security team’s audit? How secure is the data? Is it GDPR compliant? Does the provider have the security accreditation, e.g. ISO27001?
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Links International is an industry leader in innovative HR outsourcing with services such as payroll outsourcing, visa application, Employer of Record (EOR), recruitment and more! We also offer a line of industry-leading HR tech solutions including Links One, our regional payroll solution, and Links Integration Hub.
Contact us for more information on how we can help leverage your HR function.