Dive Brief:
- There has been some not-so-positive news of late about a few technology start-ups serving HR, so small to midsize businesses (SMBs) may be having second thoughts about these so-called "unicorns," according to an article at PC Magazine.
- The main problem, PC Magazine reports, is that some cloud-based HR companies were hot properties at first, but today investors are starting to wonder if those "freemium" (no charge to customers) entities may be too good to be true -- or if they'll ever make a profit.
- Author Michelle Rafter writes that now is a good time for SMBs to consider "freemium" platforms, as many of them are expanding and becoming a more "complete" suite of HR functionality.
Dive Insight:
As evidence, author Michelle Rafter cites a recent decision by Fidelity Investments to downgrade an investment in Zenefits, the notable start-up that offers free, cloud-based HR services that are subsidized by fees small business clients pay the company to be their employee benefits broker. The article says Fidelity devalued Zenefits after the firm did not meet revenue goals for the year, which led to staff cuts pay and frozen hiring.
Even so, Rafter writes, cloud-based HR providers, driven by Zenefits initial popularity, are "reworking their businesses to compete head on," and that's good for SMBs with HR needs and little cash to get them done. She cites start-ups such as GoCo and Gusto (formerly Zen Payroll) as options for employers looking for free or inexpensive HR management suites.
All things considered, Rafter writes that SMBs have "no reason to shy away" from cloud-based services. But before signing on the dotted line, be sure you know what you are getting in terms of features and implementation -- and be sure to have an alternative if the company you choose eventually tanks.
