PayrollHero raises $1 million to punch out the time card in Southeast Asia

By Richard Nieva , written on February 19, 2013

From The News Desk

In this rebounding economy, it may be tough for a boss to pay her employees like she wants. But you know what else is tough? Literally paying the employees.

The logistics of running a payroll department are particularly tough in Southeast Asia, says Stephen Jagger, cofounder of PayrollHero. His company’s software-as-a-service product helps businesses in that region manage their workforces, streamlining things like attendance and scheduling.

Today the Singapore-based company announced a $1 million seed round from 500 Startups, LX Ventures, The Futura Corporation, 8capita Partners, CEO of Hootsuite Ryan Holmes, Christian Cotichini, founder of MAKE Technologies and others. The company’s advisors include Eric Ries, of Lean Startup fame, and Kartik Raghavan, senior advisor at the Bill and Melinda Gates Foundation.

The company’s strategy is tailored to the economic and cultural issues in Southeast Asia, says Jagger. He originally came to the region when he was looking to outsource the call center of his real estate company to the Philippines, when he noticed specific payroll issues there.

First, because less people in the country use credit cards, companies have been missing out on SaaS products or iOS apps, says Jagger. Instead, they’ve been using pre-packaged CD-rom software that’s not cloud-based. In a quirk of timing, Jagger says those technologies are becoming more commonplace right now, so his team decided to introduce a SaaS product of its own. “We couldn’t find a good product, and we thought maybe it was just us being outsiders, like we couldn’t the right word to Google,” he says.

Here’s how it works: an employee comes into an office, stands in front of an iPad to clock in, and snaps a picture. The system uses facial recognition and geo-tagging to verify attendance. The employee can also do things typical to most payroll software, like view paystubs or schedule a day off. Employees can also see analytics on how they rank in attendance or how their commutes affect them. (The data says that, in general, people who live closer are late more often than those who live further away, because they don’t account for unexpected delays, Jagger says.)

He says the facial recognition component is particularly helpful in the Philippines because outdated software and manual systems allow employees to game the system – like having a friend punch in for you.

Still, GPS tracking and photo recognition feels a little too Big Brother-ish. Jagger insists it’s not a problem because the country’s workforce is so young. It also helps that PayrollHero’s target clients are call centers, restaurants and retailers. The Coffee Bean and Tea Leaf are customers. But because the employees are younger, they actually enjoy snapping the pictures, and often share them with friends on Facebook, Jagger says. It’s not unlike the theory that suggests younger kids have no concept of geo-privacy, since apps like Instagram and Foursquare have trained them to tag posts with a location.

The company is in an untapped market, so the opportunity is ripe. Jagger boasts PayrollHero’s positioning as a right-place-right-time deal, as all of these technologies are converging. But there’s always uncertainty when building a business amid a sea change. You never know what turn that wave will take, so the company may not scale in the country the way it anticipates. The company also has some long term limitations: Jagger says he is not even thinking about scaling outside of Southeast Asia right now – the product is too focused on this region’s issues to allow for an easy transposition.

Never mind it, Jagger says. He's focused on the Philippines, with its 100 million people, then likely tackling Indonesia next, with its 240 million. Combined, that's a larger population than the United States. In the war against the time card, that will keep his hands full for now, he says.

[Image credit: TheGoogly]