All Up In The Cloud
E. Kumar Sharma August 4, 2017
Rohit Chennamaneni, Jayant Prasad Paleti and Chaitanya Peddi have a lot in common - they studied engineering, love food and movies, and are of the same age. They have also had short corporate stints at companies such as Mc- Kinsey, EY and Verizon. Their shared zeal to quit their cushy jobs to start a cloud-based HR solutions company is the reason why they have been featured here.
Two years ago, the trio came together to devise a business solution for the HR space that would be easy to use, intuitive and scalable. They called it Darwinbox. It is a cloud-based integrated human resource management system (HRMS, as some call it) capable of managing the HR needs of an employee's complete lifecycle - recruitment, leave, attendance, payroll, employee movement, talent management - and also deploying analytics. A company engages with its employees on the platform.
This is a fast-growing space with globally known companies such as SuccessFactors and Workday, both American, having made a mark already. But the trio believes that their understanding of the Indian audience and the capabilities of their tech tools are beginning to make a difference. "There is a whole ocean of learning from the data we generate and the analytics that we can drive out of it," says Chennamaneni.
The name Darwinbox implies their vision to create "a step-change and a digital evolution toolkit in the HR space". Over the first year, they pitched in around `60 lakh of their own funds, and hit the market with their product by March 2016. Within two months, Darwin- box had its first major customer on board - logistics company Delhivery seeking HR services for its 10,000 employees.
Having made a mark in the market with that deal, the trio began pitching to investors. In June 2016, Darwinbox raised `3.7 crore from T.V. Mohandas Pai (through his family fund 3one4 Capital), Endiya Part- ners, StartupXseed and Tracxn Labs. In May this year, the start-up raised $4 million (`25.7 crore) in a Series A round led by Lightspeed India Partners. When asked what drew him to the start-up, Pai, former CFO and HR head of Infosys, who drew many pathbreaking HR initiatives at Infosys, said: "It's a very good team. They have a road map to improve the product over time."
The company has added both growth and girth in the past year. From just a dozen people in its team a year ago, Darwinbox has a 60-member team today and is servicing close to 50 companies - over 100,000 employees - including Paytm, Nivea and Swiggy. The goal, say co-founders, is to be a part of at least 200 enterprises and grow the team size to 150-200.
The start-up's strong point, according to the co-founders, is the flexibility it offers based on its understanding of the customer. For instance, Chenna- maneni says, Darwinbox offers an option to configure the workflow rather than impose a pre-designed one. The start-up is also working on advanced analytics that can help predict the chances of success or failure of an individual in the organisation from data collected from various components about the employee - salary, attendance patterns and performance ratings - over a period of time. The trio hopes to make Darwinbox a company that would stand out for using insights that are data-driven; but instead of doing a post-mortem, be more predictive and make employee interventions much more effective.
The start-up operates on the SaaS (software as a service) model. There are two key components to it, Paleti explains. "One is the implementation and integration cost that a company pays upfront and then there is the ongoing subscription cost - six-month or one-year pre-paid subscription model - depending on the number of employees on the platform." The installation cost depends on the size, data quality and complexity of the company. "We charge depending on the number of modules used. The key modules include recruitment, onboarding, leave and attendance, payroll and reimbursements, performance management and employee engagement," adds Paleti, unwilling to disclose costs.
Over the next two years, the company wants to focus on product innovation, gaining functional depth with diversification, backed by aggressive market expansion. It also intends to leverage technology, especially artificial intelligence and machine learning, to make the platform more intelligent and intuitive, rather than being just a system of records. The company, although sector-agnostic, will also focus on the technology, pharma, healthcare, logistics, IT/ ITeS sectors where cloud adoption is faster. Darwinbox also hopes to take its product to South-east Asia, the Middle East and Europe.
Dev Khare, MD, Lightspeed India Advisors Partners LLP, says: "Emerging markets (including India) are opening up only now. In a market with many players, the two things that give Darwinbox an advantage are the ease of use of the software application and pricing - the very reasons they have been able to gain traction."