HR startup ropes in 40 big enterprise clients within a year. Founder explains how.
If you’ve ever worked with one of the older, large companies in India, or most other places for that matter, you’d know how frustrating it is to apply for leave. You would have to login to a clunky system, go through countless steps, including calling up the IT team for help, before you finally give up and walk down to the human resource (HR) department. The HR person would then manually take in your leave application and feed it into his system – most times, with help from the IT team.
The only plus in the process is that sometimes, you could get lucky and the leave you took wouldn’t get recorded. Then you could take more than your allotted share. And if you are due for an appraisal, just brace for a whole new process, most probably with another system.
All that will be history if Darwinbox has its way. It built an HR management suite on the cloud that covers the whole spectrum of HR-related activities – from recruitment, onboarding, employee management, payroll, leave, transfer, and performance management to exit management. An employee would need just one login for the entire worklife and an HR person or the CEO gets a 360-degree view of an employee or a team – from their rating at the time of recruitment to how the salary and performance trajectory has been. This makes decision-making and processes faster.
If software products for consumers like Uber or Amazon can be so user-friendly that even first-timers barely need hand-holding, why can’t the software managing an HR system – which is as important to a company as finance – be easy to use? That’s the question that led Rohit Chennamaneni, Chaitanya Peddi, and Jayant Paleti to build Darwinbox.
“Be it Uber or some HR software, both are products; both are used to achieve a certain end. For example, if you take a simple workflow of applying for a leave or giving somebody feedback, these are simple processes – like you would rate an Uber driver after a ride or you would buy something from Amazon. Why can’t HR software be that simple? That is where we started, and remain focused,” Chennamaneni says.
“For a lot of our clients, Darwinbox has replaced two or three systems that they were using to do different aspects of HR,” he tells me. “Even though the functional depth and flexibility of the product is high, we stick to making sure it is very easy to use for the employees. That is a differentiation that got us a lot of clients in the market.”
The SaaS suite is built for mid-size to large enterprises – those with a headcount of at least 500 employees. “We would go up to 30,000 employees in our client base today,” Chennamaneni says. A year since its product hit the market, Darwinbox claims to have over 40 enterprises as clients with upwards of 100,000 employees on its tech suite.
The startup today announced its series A funding round of US$4 million, led by Lightspeed India Partners. Darwinbox’s earlier investors Endiya Partners, 3one4 Capital, and Startupxseed Ventures also participated in the round.
How it got enterprise clients
The HR software market globally is expected to cross US$9.2 billion by 2022.
There are several niche startups which have a laser-like focus on solving parts of the HR functions. EdGE Networks, for example. It uses machine learning and natural language processing to make hiring easier for companies. It is also based in Darwinbox’s home city, Hyderabad.
Then there is Chennai-based ZingHR which also claims to cover the entire spectrum of HR functions “from recruitment to retirement.” It’s a couple of years older than Darwinbox and focused on small businesses until recently, when it started scaling up to serve larger enterprises.
Darwinbox was built to serve large enterprises from the get-go. It competes with the likes of SAP Successfactors and Oracle Fusion, according to Dev Khare, partner at Lightspeed India.
HR software from the biggies can be an expensive affair.
- SAP paid US$3.4 billion to acquire SuccessFactors.
- Oracle bought Taleo for US$1.9 billion.
- IBM paid US$1.3 billion for Kenexa.
Darwinbox offers a cloud-based alternative to these at more affordable price points. “At all sizes and in all industries, businesses succeed when their employees and managers are engaged for maximum productivity and potential. As a result, human capital management software is core to the success of every business,” says Khare.
The startup banks on the experience of its founders. Paleti, Chennamaneni, and Peddi played client-facing roles at Mckinsey & Company, Google, Ernst & Young, and Deloitte before starting Darwinbox. “So we had access to large companies, understood their needs, and knew what problems they were facing,” Chennamaneni tells me.
“Sometimes, when we – as consultants – asked for employee data from a company, we were not able to get all of it. The HR had to go to 10 places to collect data for whatever analysis that needed to be done. It is fundamental to a company that you should be able to get any data on the fly,” he says.
Client referrals were another early edge. The three founders leveraged their consultancy background to do all the selling in the first year. They didn’t hire any sales employees for the whole year. “We focused a lot on making sure that our early clients were successful with our product. They had to have a good experience. This helped us get a lot of references. Most of our client base today came through referrals,” Chennamaneni says.
That is his tip to other startups selling to enterprise clients. “Once you go with references, the ease of sale increases manifold. As a startup, the level of trust enterprises have in you is very low and the sales conversations become much more easy when the reference comes from a trusted company.”
Thanks to the early adopters, the startup is close to hitting the US$1 million annual revenue milestone, the founder says.
A year ago, one of India’s biggest logistics companies Delhivery switched to Darwinbox.
Delhivery covers over 9,000 zip codes in more than 800 cities in India. Its team-size, including a fleet of delivery boys, is over 15,000. “We wanted a platform that can adapt to our frequently changing needs,” Suraj Saharan, co-founder of Delhivery, says in a statement to the press. “The first thing that strikes you when you see Darwinbox is its simplicity in design – a refreshing change from the norm.”
Delhivery wanted to manage both its on-roll and off-roll employees on the same platform. Delivery personnel are contractual workers – and so off-roll – but the company HR has to manage them as efficiently as they would the core team.
Anyone who applies to Delhivery for a job goes through Darwinbox’s applicant tracking system. Interviews are scheduled within it. Meetings are tracked here. If you are selected, the onboarding process, including signing key documents, happens through the suite as well. The company policies and processes are all on the system and the HR manager as well as the team leads get prods to take the newbie through them. “Even laptops are assigned to the employee through this,” Chennamaneni tells me.
Attendance, compensatory offs, holidays, salary slips, investment declaration, appraisals, exit interviews … all of it is within the suite. If you pick out the appraisal function, it will need to incorporate different performance metrics for different teams within the same company, Chennamaneni explains.
For instance, the performance of a sales executive might be measured purely on the amount of sales she does. The tech team, which doesn’t have clear numbers to track like a sales team, might measure merit based on different competencies like coding skills, logic, and so on. “The flexibility of the HR management suite should ensure that it can take care of a sales employee as well as a tech employee equally well to make sure there is objectivity in the whole process,” he points out.
“Before getting on Darwinbox, Delhivery had different software products to do all these. They had one for payroll, another for leave management, a separate one for performance tracking, and so on,” Chennamaneni says.
Delhivery is one of Darwinbox’s first large customers. Paytm, Nivea, Godrej, Sai Life Sciences, and Swiggy are some of the other big companies using Darwinbox.
With fresh funding in, Darwinbox now wants to sell outside India as well. “We are going after a few Asian markets and also Europe,” Chennamaneni says.
The team is also constantly thinking of what is the next stage for their product. “There are a lot of buzzwords in the market – artificial intelligence, machine learning, psychology… And there is so much you can do with the product. If you take AI and machine learning for instance, we are thinking which use case should we employ it for and which we should not.”
Picking the battles is a challenge, he says. “What markets want one year from now is something we need to start building now.” That’s what is keeping the founders awake at night.
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