HR SaaS remains as a market with great potential in China. GaiaWorks is going to stay relevant in fierce competition, thanks to its decade-long experience in serving enterprises from labor-intensive industries.
Jan. 16th, 2019 /EqualOcean/ - Chinese Suzhou-based GaiaWorks (盖雅工厂), a WFM (workforce management) solutions provider, announced today that it has secured CNY 300 million (USD 45 million) in Series C funding led by Tiger Global. Existing investors Warburg Pincus and Matrix Partners, China followed on.
The company is going to use the latest funding for:
1. strategic enhancement and business operation improvement;
2. greater R&D input for Machine Learning and AI engine, both of which can be applied to innovated WFM scenarios such as business forecasting, optimized workforce scheduling, employee retainment and strengthened analytics;
3. going global with its 10-year-long experience in WFM.
Prior to this round of funding, it received a total of USD 30 million in the Series A (2016), B and B+ (2017) funding.
In May. 2018, GaiaWorks acquired Yiqin (易勤) Software, another Chinese attendance management software developer serving 1.5 million employees in over 400 Chinese enterprises.
Founded in 2009 by ZHANG Xinbo (章新波), a former BenQ Guru (明基逐鹿) and Kronos (克罗诺思) employee who gained rich WFM experience, GaiaWorks started as a cloud-based developer for intelligent workforce scheduling applications and systems.
It employs prediction algorithms based on the analysis and integration of historical business and operation data to bridge the gap between business and labor: reducing companies’ labor costs, avoiding regulation violations and learning more about their employees.
5 years later, GaiaWorks landed its strategy in “To B” HR SaaS (human resource software-as-a-service) and began seeking funding. Given that the Asia-Pacific region has a rich supply of labor resource for the global market, GaiaWorks also made a foray into overseas markets in South Asia and Oceania: Vietnam and Thailand first; then Australia and New Zeeland.
Up till now, its software and services have helped 4 million employees of over 1000 companies in 13 Asia-Pacific countries with great efficiency, increased productivity and deeper employee engagement. Most of Gaia’s clients are medium- and large-sized enterprises in the manufacturing industry, retail, governmental institutions, including General Electric, Samsung, Volkswagen, Chery, Estee Lauder, Nike, GAP, Sinopec, PetroChina, Shenyang Railway Bureau, etc.
ZHANG noted during an interview with Ifenxi (爱分析) that the rention rate of GaiaWorks’ clients was 99%: “On average, we offer small- and medium-sized companies CNY 30-40 thousand per transaction while CNY 3-4 million for large enterprises.”
As the Cloud Computing technology is still progressing, the market size of HR SaaS in China is expected to reach CNY 8.6 billion (USD 1 billion) in 2020, nearly 3 times of that in 2017. Although Gartner reported a slowdown in this market at a CAGR (compound annual growth rate) of 32.2% in Jan. 2018, it predicted a YoY (year over year) growth of 30% in the next 3 years to come.
Apart from that, the penetration of AI tech might supplement WFM software platforms, analytics and applications that take advantage of better processed data accumulated during a longer time frame.
In addition, WFM has always been a time-consuming and laboursome manual process afflicted by low efficiency and dissatisfaction. Companies are in urgent demand of more efficient ways to control labor costs as China’s economic growth is plateauing and the global economy is not optimistic.
Thus, the HR SaaS remains a market with growth and opportunities.
Nevertheless, big challenges coexist as GaiaWorks will definitely face the fierce competition from other players such as the longer-established Beisen (北森) that completed a Series E Funding of over USD 100 million in 2018, Ali-backed DingTalk (钉钉), Dianmi’s (点米) “2haohr (2号人事部)”, as well as foreign HRM service providers including Workday, FESCO etc.
According to the latest figures from China National Bureau of Statistics, there are 900 million Chinese in work, among which 200 million are white collars while 700 million are blue collars. As for blue collars, over 50% are frontline employees from the manufacturing sector (100 million) and service sector (120 million), which Gaia has served throughout a decade. Compared with DingTalk which focus on combining office WFM and cooperation mobile messaging, it comes with an advange in its experience in managing (especially scheduling) frontline employees.
In terms of business, as CEO Zhang pointed out in his speech regarding HR SaaS’ development in China, the annual fees of products/services, the costs of client acquisition and the client retention rate were the cores for us to stay relevant and not being “struck out”.