UK-based Oyster announced a $20 million Series A round of VC for its global HR suite and Employee of Record/PEO solution.
Founders and investors have been scrambling to capitalize on the distributed and remote work trends that were accelerated by the global COVID-19 pandemic. There’s no doubt that distributed work is the future. We saw this in our research for the Workplace Intelligence Report well before COVID. Oyster seems to have taken a few of the existing solutions in the market and put them together in one platform, bespoke for the globally distributed small to medium-sized business.
Let’s break down what look to be the components of the Oyster solution in the context of what’s available in the market today.
All in one HR Suite: For the SMB, HR suites have been prevalent for years. Having fewer resources means fewer people to manage systems. The middle market HR tech buyer prefers a suite, but suites never do EVERYTHING well and these buyers also won’t trade off on key capabilities. Buyers are advised to look for open APIs and successful integrations to best of breed solutions where you need them.
Global payroll: Many HR suites that have payroll have the ability to offer global services to varying degrees. For larger employers, there are global payroll solutions like immedis, an emerging cloud-based innovator for large globally distributed teams. Solutions like immedis are built to integrate across enterprise HR, ERP, and financial systems.
Employee of Record (EOR)/Professional Employer Organization (PEO): It’s a model that works well for small businesses that don’t have a global infrastructure or resources to support global internal operations and keep up with regulatory compliance. Returns on this model normally start to diminish on these solutions as companies grow. For example, the PEO model in the US starts to lose its ROI between 50 and 100 employees based on the cost compared to other tech and service solutions available for employers of that size. Several players have emerged in this space: Omnipresent, Papaya Global, and Velocity Global, all provide global EOR/PEO solutions and HR systems with varying depths of their offerings.
Whether you’re considering global payroll or a global EOR/PEO model, compliance (both tax and regulatory) is the big concern for employers, and the big question for buyers to ask: Does your partner indemnify you from risk on compliance?
The HCM category saw USD $2.59 billion of VC investment in 2020. Payroll tech saw investment of $206 million. $5 billion was invested across all HR tech categories globally in 2020.