“Earlier, Human Resources used to be a function, which was just there from a welfare point of view, but now it has moved into creating a wholesome employee experience,” said Sourabh Deorah, CEO and Co-founder of HR tech startup Advantage Club.
In 2016, Deorah along with Smiti Bhatt Deorah co-founded Advantage Club and envisioned it as a global platform for employee engagement as well as financial wellness with benefits like perks, rewards, recognition and early wage access on a single platform. The idea was to reinvent the wheel around employee benefits and engagement by building deep engagement products further personalised according to each user’s behaviour. The Gurugram-based startup has grown significantly over the last few years and presently operates in more than 100 countries with more than 1000 clients and 10,000 brand partners.
In an interview with The Plunge Daily, Sourabh Deorah shares his entrepreneurial journey, challenges faced by cos in employee engagement and retention in post covid-era and the future of HR tech industry.
Q: Advantage Club has emerged as one of India’s prominent HR tech startups. Please tell us how you came up with the idea to launch this platform and take us through your initial journey.
A: Before launching Advantage Club, I along with my co-founder was working for Microsoft in the US where we observed that the tech giant had a very low attrition rate. We have worked for other organisations as well but never saw such a low attrition rate. So, we started talking to our peers, seniors about why they chose to stay back because the average retention rate that was visible to us was over 5 years which was unheard of in the tech industry in the US. So, our takeaway was that employees had a general feeling that the company cared about them and it would stand by them through thick and thin, which was something unique. So, there was a very strong push towards benefits and culture. Also, as a Microsoft employee you’d get better pricing everywhere, you’d get better access everywhere. So, we thought if a behemoth like Microsoft can do this in the western zone, why can’t we bring such a concept to Indian companies. We started out with SMEs in India. Our initial idea was that we’ll put all SMEs together under a single umbrella and get them the same level of benefits, which an employee in Google or Microsoft gets in the West. We did that for a few years. But then the journey evolved to start catering to mid to large corporates, with multiple products around culture building, employee benefits, and others. Initially, the idea was just to start with corporate books, where you get access to better pricing, because you are a part of a premium corporate, you work for a premium company. So, that is how our journey started.
Q: Advantage Club has grown rapidly over the last few years as it has a presence in more than 100 countries now. Please tell us about the tech innovations that you have implemented for greater benefits of employees, and how it helps in employee retention programs.
A: At Advantage Club, we aim to create a positive culture among our corporate clients, which happens by instant gratification, a culture of appreciation, and community building within the organisation. So all the big tech stack that we’ve built enables these three core principles. If any company wants to recognise the efforts of an employee, everything is instant. People can transfer points on the platform instantly, if an employee goes and redeems those points across the brand, the voucher gratification is instant. Similarly, we create a culture in which people can come and interact on common platforms like Hobby club; they can play games with each other, for example they can play chess with colleagues. They can compete in html5 games with their colleagues. And then, there’s a leaderboard which is drawn at a company level. So, these are the core products that we have created, which makes an employee experience much superior and their affinity towards the company clubs. In terms of retention rate, we have seen in some of our top corporations that the attrition difference between an engaged company employee and disengaged employee is anything between 45 to 55 per cent. So, it means that 70 to 80% of organizations would be engaged on a platform like Advantage Club and those 70 to 80% companies will have 45 to 50% less attrition rate, then the remaining 20% which are disengaged with the platform.
Q: All of us are operating in a dynamically changing and challenging environment, thanks to the pandemic. This has also led to changes in employees’ expectations – there is a greater demand for flexibility; focus on immediate gratification, among other things. Please tell us how challenging this period has been for you.
A: Of course, we’re living in turbulent times. But at the same time, the requirement of employee engagement has, in general, increased. Because now people are all over the place, their employer branding is not restricted to a certain place. Now, you have to build all of that in a digital world and ensure that employees are able to connect with the organization. Because when you’re sitting at home, there’s a possibility, you might start thinking that working for employer A or B doesn’t really matter. So, it becomes crucial for an organization to engage employees even more. And now the same thing could be expected from the employee end as well, it’s very important to connect with their colleagues. That’s why this platform has become more relevant. In terms of challenges, some of the categories under business perks such as dining, hospitality and travel got very bad beating. So initially, there was a lot of struggle but sooner we got a sense of the changing market and observed where people are spending their time and money. Then, we adapted quickly and brought in some changes in order to help users get maximum benefit in those places. Also, the fact that we have been able to go global could be attributed to the pandemic because a lot of companies are now planning to become global by design, instead of being regional. Initially, it was very challenging, because it was not an option for us, it was more of a necessity. Our clients wanted a solution which had to go live in multiple countries at one go. And that’s where we adapted very quickly and it turned out to be an opportunity for us, where we started acquiring clients outside India as well.
Q: Integration of AI, artificial intelligence and machine learning with recruitment is an emerging technological trend. How does it help an employer make smarter choice in hiring talent and how organizations benefit from this innovation?
A: AI and ML are spaces, which help a human mind make decisions in a better way, with a more data-prone approach. I would say our role is more towards implementing AI and ML towards retention, then recruitment and in retention, we play our part on three fronts. Firstly, we help employees browse and move around the platform and or to find out where they want to spend, depending on their colleagues’ preferences. Every company has its own culture, for example- we have seen that in manufacturing companies, most of the employees prefer QSR (Quick service restaurants); in consulting firms, given people are now back in office, night parties are a common thing. So we help people discover brands accordingly and also help managers plan their awards accordingly; whom to recognise, when to recognise and how to recognise, the algorithm plays a role there. And at the company level, we give numerous analytics around how different teams are engaged, how things are proceeding, what they can do to move the engagement towards the right direction, where there might be potential for attrition. So, that’s another area where Machine Learning plays a key role for our platform.
Q: It is speculated that the global HR tech market will reach over $35 billion by 2028. What are the key challenges impeding its growth and how optimistic are you about the growth of this industry?
A: I’m very optimistic about this as a space. Earlier, HR used to be a function, which was just there from a welfare point of view, but now it has moved into creating an employee experience. If you ask a CEO, do they care about benefits? Probably the answer would be no. But if you ask them whether they care about retention of employees or faster recruitment process. I don’t think any CEO will say no. So, that’s where the world is headed now. In a world, where your location has become completely irrelevant, I can only imagine that the talent market is just going to get more fierce. And this will create fierce competition to engage employees in different ways and consequently, the idea of benefit of benefit will become more prominent. That’s why I see such positive projections around HR tech because now it’s not only about doing good work, but it’s also about creating great employee experience. All the tenets that have been applied around customer experience over the last decade, will come into fore for employee experience in the next three to four years itself.
Q: As per Gartner 2021 HR Leaders Agenda Poll, 48% of CHROs stated that their current HR technology solution hinder, rather than improve, employee experience, while 24% said they struggled to understand how evolving technology trends will impact talent management process. So, there is a lack of clarity regarding impact. So how can we address this situation?
A: Yeah, it’s very true, we replace a lot of incumbent tools in our world and we do realise that their adoption rate is very low. And tools by design, are not very employee-centric. Most of these tools have been written five years or seven years back for automating some part of workflow. Now, the challenge is that, in an era, where people are trying to achieve an employee experience, making it happen by just an automation tool won’t really suffice. If you’re trying to use a floppy disk in the Netflix era, that will not work. So, that’s the gap where we are living, and it becomes very important to migrate to the latest technologies. The only challenge in this space is for people to understand that floppy disks won’t work anymore. And unlike a lot of other functions, this takes a little bit of switching time here. Because there is an adoption which has happened across employees. And that’s where it becomes very important to kind of help companies understand the value, and then move them to a new system and a lot of times handhold them as well. It’s like the same problem railways would have faced while launching the IRCTC website. People were used to working in a particular way, no matter how inefficient it was, but they eventually moved to a better system.
Q: There was another survey, which revealed that the progression of underrepresented talent stalls at mid-level and senior level positions. slower rates of promotion and misperception of leadership potential. How can this challenge be tackled?
A: Every company has its own roadmap in terms of how to scout talent within an organisation. And that’s why, in a non digital world, everything becomes dependent on the manager. My success will be dependent on what my manager perceives about me and then what his or her manager thinks about him. So in a world of hierarchy, that’s the fundamental problem where at a central level, you don’t have visibility to the work done, or developments happening at the ground level. And this is where a digital platform becomes even more relevant. It can help the central leadership to monitor every employee’s performance and reward them accordingly. And if we are able to do it, we will see people jumping up the chain, and breaking away from the one tier hierarchy approach, which is there.
Q: Please tell us about the business revenue model of Advantage Club and your expansion plans.
A: We have two revenue models. We charge a SaaS, small subscription fee, from corporate on an annual basis. It depends on the market and the size of the company, in the programs they take but it’s usually a very nominal amount. We always make sure that whatever we charge should be lesser than the value we deliver. And similarly, on the redemption side, whenever people give any points on the platform, whenever an employee goes and redeems, we charge something from the brands and it’s again a small amount so that the brands stay profitable in every transaction. So, the idea is to take small amounts from both sides and more importantly scale the business. Regarding our reach, we are playing at a global stage. While we are operating in 100 countries, we are majorly focussing on seven countries across Southeast Asia, US and MENA regions.
Q: Please tell us about your funding and what makes investors bullish about Advantage Club.
A: Till date, we have raised USD 7 million which includes the 5 million fundraise in October last year. Also, there are three to four factors that make our company attractive for investors. Firstly, we are building a user base which is considered the most premium in India, or in any market for that matter. We cater to salaried class and above, which is the cleanest target group for any business. Also, we have disproportionate engagement metrics as compared to a standard B2C platform. So, this makes Advantage Club quite attractive for foreign investors, from a vision point of view. Secondly, we are solving problems which are global by design. Other factors include our SaaS model, the higher retention rate, our corporate churn is almost zero till date. So, I believe, these are the factors that make investors bullish about Advantage Club.