News
Moving in the direction of an all-in-one HR platform, Deel acquired AI based people-development start-up Zavvy on Feb. 28. The acquisition expands Deel’s current offerings in employer-of-record (EOR) and contractor hiring, global payroll, compliance expertise, in-house legal and immigration services, to now include people management.
About Zavvy
Co-founders Joshua Cornelius and Mehmet Yilmaz launched the “AI-enhanced, people enablement platform” in 2021. Based in Munich, Zavvy targets mid-sized companies looking to drive performance and talent retention through features such as onboarding, development and employee connections in hybrid work environments. It counts Moss, Primer and TypeForm among its customers.
About Deel
Deel provides an all-in-one HR platform for global teams, which includes onboarding, local payroll and compliance. Co-founded in 2019 by Shuo Wang and Alex Bouaziz, Deel serves 25,000 organizations, helping to simplify the management of an international workforce. The company reached a reported $12 billion valuation in 2022, according to Axios.
Behind the Strategy: Deel’s Acquisition of Zavvy
The transaction between Deel and Zavvy occurs during a period marked by significant consolidation within the HR technology sector. According to Lighthouse Research and Advisory, there were over 25 mergers and acquisitions in the HR tech space in 2023 alone.
Deel initially approached Zavvy to propose a partnership. When asked what pushed Deel to acquire Zavvy instead, Deel co-founder and CRO Wang told Reworked, “We decided to bring Zavvy on board because we saw how seamlessly its tech fit into our long-term vision for Deel as the most complete, AI-powered HR solution available .... Zavvy gives us the ability to fulfill the needs of our customers, who increasingly want to consolidate tools and operate on a global scale.”
Redefining HR Solutions in a Single Platform
The integration of Zavvy into Deel’s payroll and HRIS system will allow companies to use one platform to streamline administrative tasks, consolidate tools and accelerate team productivity. This offers visibility into every stage of the employee life cycle for a company's global workforce. “Typically, businesses Frankenstein a solution together from many different HR tools – one for HR, another for payroll systems, a third for performance, more for benefits, equity, etc.,” said Wang.
With the acquisition, Deel will bring Zavvy’s AI capabilities to its slew of HR tools. Zavvy’s AI-backed technology makes suggestions for managers and their teams to assess performance, create personalized development plans and develop customized roadmaps for career progression. Deel intends to integrate Zavvy’s AI technology into a new offering, Deel Engage, which will incorporate learning and development courses, run performance and compensation analysis for top performers and create career paths and planning modules for their teams. Engage will be licensed as an add-on offering at a cost of $20 per user per month.
Additionally, Deel HR will be offering a free version of its HRIS product. “The free version includes everything, all-in, including automated access to apps like Google Suite, the ability to collect custom documents, manage expenses, time off and bonuses. Users can track churn and retention with HR reports, org charts and workflow automation, too,” said Wang. Previously available for organizations with up to 200 people, the module will now be available gratis for organizations of any size.
Trends and Trajectories in the HCM Industry
The integration of Zavvy’s HCM resources into Deel’s EOR offerings is just one of the latest in industry consolidation. On Feb. 13, Tel Aviv, Israel-based HCM start-up HiBob acquired London-based payroll provider Pento.
The Lighthouse 2023 recap, referenced above, noted a trend of service companies are acquiring technology firms for the benefits of company expansion and enhancements. Alternatively, technology companies are acquiring service providers to broaden their client base and incorporate more data into their solutions. As we are only a few months into the new year, we’ll keep our eyes open for mergers and acquisitions following the same trend.
