Darwinbox raises $72 million for its all-in-one HR cloud software solution


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Companies are adopting cloud HR technologies as their workforces become more dispersed during the pandemic. According to PricewaterhouseCoopers, about 44% of talent managers look to cloud solutions to increase efficiency and productivity, while 35% see the cloud as a way to reduce costs. In a recent research by ISGa technical research and consulting firm, 46% of companies said they are using an HR software-as-a-service (SaaS) platform or hybrid solution (up from 20% two years ago), with 57% saying they expect a subscription-based SaaS or hybrid solution by 2023.

The advantages of cloud HR software includes less paperwork and better access to information about rewards and benefits, among other day-to-day improvements. A KPMG report notes that cloud HR solutions can also lead to “smarter decision-making” through data analytics, AI and cognitive computing. Given the potential of the market, it is not surprising that HR software vendors continue to grow at a rapid pace. PitchBook data shows HR startups raised more than $9.2 billion in venture capital from January 2021 to October 2021, a 130% increase from 2020.

One of the companies benefiting from the windfall is the India-based Hyderabad Darwin box, which provides HR software designed to help companies automate the employee lifecycle. Founded by Chaitanya Peddi, Jayant Paleti and Rohit Chennamaneni in 2015, Darwinbox announced today that it has raised $72 million in a funding round led by Technology Crossover Ventures with a valuation of more than $1 billion.

Cloud-based HR

Darwinbox CEO Chennamaneni was previously a search quality analyst at Google before joining McKinsey as an engagement manager. Paleti was a consultant at Deloitte and EY, while Peddi previously served as a product analyst at Verizon Wireless and a senior consultant at EY.

Darwinbox’s platform houses an enterprise social network similar to Microsoft’s Yammer called Vibe, as well as surveys that capture employee feedback and data points for analysis. Through the software, managers can send announcements, notifications and other broadcasts to everyone in the organization, even those without a corporate email.

“Darwinbox … empowers HR stakeholders to build experiences for employees throughout their entire lifecycle,” Chennamaneni told VentureBeat via email. “[The platform] … helps visualize, monitor and control the flow of data. Integrations are possible in enterprise resource planning, finance and any other support system through open APIs and more than 200 out-of-the-box integrations.”

Darwinbox also features “groups” — which allow employees to find others in the company who share similar interests. The platform also includes standard features such as time and attendance tracking, payroll and recruiting tools, travel and expense management, employee help desks, onboarding flows, performance management, and workforce analytics. People analysis, also known as talent analysis or HR analysis, refers to the method of analysis that can help managers and executives make decisions about their employees or personnel.

Darwinbox relies heavily on AI and automation, with features such as hands-free voice commands and a prediction engine that aims to “drive the right action at the right time in the employee lifecycle”. The platform uses AI and optical character recognition to process HR documents, including bills, expenses, and employee IDs, and to match applicants with available roles, evaluate resumes using “multi-format resume parsing” based on of a skills taxonomy.

“Darwinbox leverages AI and machine learning across modules to enable faster and more streamlined HR processes and functions across the entire employee lifecycle,” added Chennamaneni. “Darwin, Darwinbox’s own voice and chatbot, is built on AI and machine learning. The time and attendance module provides employees with facial recognition built on Amazon Web Services’ machine learning-based Rekognition framework. Other use cases include security traffic blockers, load balancers, and more.”

Bright outlook

Darwinbox competes with several startups in the cloud HR software market, including Namely, Remote, ChartHop, Visier, and Hibob. But the company’s focus on automation is trendy — and somewhat distinctive. According to of staff Today, 38% of companies already use AI in their workplace, and 62% expect to use it already this year.

However, there can be a downside to AI technologies if they are not implemented thoughtfully. A recent study published in the Journal of Business Ethics found that algorithmic decision-making in HR recruitment and development “isn’t a panacea for eliminating bias.” Algorithms, the co-authors concluded, are vulnerable to bias in terms of gender, ethnicity, sexual orientation or other characteristics if the algorithm builds on imprecise, biased or unrepresentative input and training data.

“[T]there is a need for transparency here [in HR automation]; employees and candidates must have the ability to understand what is happening within the process,” the co-authors wrote. “[C]companies should not rely solely on the information provided by algorithms or even implement automated decision-making without any control or audit by humans. While some biases may be more obvious, implicit discrimination against less obvious personal characteristics can be more problematic, as such implicit biases are harder to detect.”

In December 2021, New York City passed a law requiring audits of AI-type HR technology — including technologies used for recruiting, hiring, or promotion — applying the technology to New York City residents. Companies are required to conduct third-party bias audits each year and provide a public summary of the results, and those who don’t follow the rules risk fines up to $1,500 per day.

We contacted Darwinbox with questions about AI’s ethical practices, including whether steps have been taken to identify known flaws in resume parsing technology — and will update this article accordingly as more information is provided.

Cloud HR software has potential cons of itself, including the need for a consistent Internet connection, less control over security, and fewer customization options. But Darwinbox claims it doesn’t struggle to attract new customers. The company with more than 700 employees — which it says has grown 200% in the past 12 months — counts more than 1.5 million users from more than 650 brands, including Starbucks, Dominos, Calvin Klein and Cigna on its roster.

“With the pandemic and the world going remote, companies have little choice but to rethink their talent strategy and embrace digital transformation,” Chennamaneni continues. “The result is a three to five year shift in digital-first thinking for all things talent. HR technology has now become the main driver of workforce strategy. The pandemic has given us a tailwind to conquer passive markets. Over the past year, Darwinbox has witnessed growth of 200% and much more (300%) in growing markets such as South East Asia.”

Darwinbox’s latest funding round – a Series D – had participation from existing investors, including Salesforce Ventures, Sequoia India, Lightspeed India, 3One4Capital, JGDev and SCB10X. It brings the company’s total capital raised to more than $112 million after a $15 million round in January 2021.

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