Domestic players are grabbing market share while overseas competitors are still hesitating to offer customized services to Chinese clients.
China's HR SaaS market is witnessing the emergence of domestic players. Image Credit: Austin Distel/Unsplash
Chinese Human Resource (HR) SaaS tool provider eRoad Software announced closure of its Series C2 round on Jan 6, worth hundreds of millions of yuan, following a CNY 200 million Series C1 in July 2019. Eastern Bell Capital led the deal, while Hillhouse and SIG, among others, followed.
eRoad is a cloud-based platform that provides enterprises with an integrated set of tools for managing employee payroll, benefits and compensation. eRoad started its HR management business in 2014, when Wang Tianyang, a former Global VP and cloud computing head at SAP, acquired the company.
The company’s product mix is comprised of several offerings. Its core HR management tool, People+, is a one-stop solutions platform that deals with core benefits, tax and payroll management. The tool can also cover other compensation-related events such as new hires, transfers, promotions and terminations. eRoad BI is a Business Intelligence (BI) analytics tool. The firm also has a PaaS platform to meet specialized needs, often coming from larger enterprises.
China has witnessed several significant tax reforms in recent years, like the merger of state and local taxation, which increased the complexity of compensation management in China.
Riding on the wave of tax transformation in China, eRoad found its way by focusing on the niche of payments to tap into the Human Capital Management (HCM) market. An array of better-established overseas competitors in this sector like Oracle, SAP and workday have sound HCM offerings, like SAP SuccessFactors and Workday Compensation. But these foreign players are lagging in customizing their products for their Chinese clients, partly because their businesses there only account for a small part of their revenues.
eRoad also touted its ability to serve its Key Account (KA) clients, most of which are mid-sized companies, which differentiates the company from SMB-focused (small and medium business) firms like Xinrenxinshi, a local competitor. More than 400 mid-sized companies (with an average of 2600 employees) are paying users of eRoad as of 2018.
However, major competition is still coming from two other domestic players, KNX and Beisen, which were analyzed in a previous article by EqualOcean. The high costs of investing in BI software and providing HR consultancy services also add pressure on the company’s bottom line.