Reporting from Turkey: This company wants to disrupt how businesses in Turkey handle their human resources
This article is part of a dispatch series about the startup ecosystem in Turkey.
Running a small or medium-sized business comes with a whole host of challenges. Business owners have to balance managing their operations, sales, and every other aspect of keeping their business afloat. One of the most frustrating segments of making sure that a business operates smoothly is managing a human resources department.
Tracking an employee’s payroll, leave, and other needs can present a challenge for small and medium enterprise (SME) businesses whose main focus is growing their company. Thankfully, the young Turkish startup Kolayik is determined to simplify this process for businesses of all sizes.
Exploring the Turkish market
With an estimated population of nearly 75 million people living in Turkey, roughly 80% of the work force are believed to be employed at over 3 million SMEs employing between 5-250 people. Currently, human resources actions both within the companies as well as interactions with the government are all being conducted offline using either localized programs like Logo or hard copies that require physical signatures. The problem is that without a cloud-based solution, employees and managers are unable to access their information, making it more difficult to stay up to date and ensure better decisions.
Efecan Erdur, one of Kolayik’s co-founders, notes that companies in Turkey are reliant on using a number of different solution providers to manage their various needs. Having identified this need in the market, Erdur and his co-founder Çağlar Yalı have developed a web-based, centralized SaaS platform, similar to Zenefits in the United States, as a one-stop shop for coordinating a company’s HR employee information management.
Taking HR solutions digital
Working out of the Koç University Incubator Center in Istanbul, the company has been operating for 11 months since the release of their minimum viable product. They are currently providing services to 300 companies, accumulating around ten thousand people in their database.
Their base package includes the employee information management system, which acts essentially as a directory with phone numbers and other important details like a company calendar to coordinate when workers can take leave without overlapping. By moving this data online, employees can easily check their profiles and supervisors are able to manage all employee data across the entirety of the company.
There is also an app that allows users to add incremental features for access to segments like payrolls, performance assessment, and a time tracking schedule to make sure that workers are not going over their permitted overtime allowance. In the future, Erdur says that they will publish an API for outside developers to build new custom additions.
Approaching opportunities in the domestic market
Beyond their base product, Kolayik is looking to additional sources of revenue to help grow their business. As a part of their employee management, they have accumulated a massive amount of data that will only continue to expand as they bring in new clients. Erdur notes that most companies in Turkey are not placing enough importance on the value of utilizing their data.
One of the areas in which the crew at Kolayik believes that they can play a role in helping companies make smarter decisions is in selecting the right employee insurance package. Erdur notes that while there is national insurance that covers basic needs, most of the 50+ people companies buy added private insurance policies.
Depending on their client’s profile, they can recommend which packages to take. If the company has high earners, then they can suggest pricier insurance packages, and more affordable ones for lower income workers.
Targeting advertising is a second area where the data can be utilised for marketing purposes and provide a solid revenue source for Kolayik down the road.
As a part of the government form for leave, it includes where and when employees go for their time off. Employers are required to mark down how employees take their vacations, noting whether they went to visit family, traveled abroad, or spent their time in another way.
Erdur explains that Kolayik owns the data, so they can then go and target the employees with ads like hotel packages for vacations. He adds that this data is only used for targeting and not sold or transferred to third parties.
Compliance as a vehicle for growth
The Turkish government has announced the expansion of their eGov program, a move that Kolayik sees as a great potential opportunity for them to expand their client base. The plan for the eHR program that is set to come into effect in 2017 will require all companies to submit their employee information to the government, including payroll, hours worked, and leave.
Erdur notes that based on the experience of past programs like the eHealth policy that was delayed by two years, it is unlikely that the 2017 deadline will be upheld. However, as companies move towards complying with the new regulations, they will seek out providers like Kolayik for streamlining their data, hopefully removing the pain from the interaction with the government.
Kolayik wants to take advantage of the eSignature system that has come into use in Turkey in recent years to add features to make the leave tracking app function more effectively. Turkey has a law in place that requires all citizens to have their signature on file, allowing them to sign any form online including for HR purposes.
Erdur says that they have signed a deal with an eSignature company to include this in their service, but are waiting for their angel investor to step in before implementing this feature as a part of their services.
Erdur says that they are in touch with a number of VCs for more funding. In the meantime, they are working on building their traction count and attracting more companies to use their service. He adds that they are also considering offering big companies the program for free to help gain expanded recognition.
Erdur explains that the startup does not expect to grow their revenues significantly in the near term based on the subscription fees. Instead, they are hoping that their added features apps will become popular for users and create new cash flows.
The crew at Kolayik has identified a growing need in the Turkish market for bringing HR into the digital age. As the government and private sectors continue to modernize, the company is setting itself up as the go-to choice for easing this process along.
They appear to have a diverse revenue plan in place, which will be important as they are likely to face slow growth over the short-term as the local market plays catch up. Based on a reading of the Turkish ecosystem, companies there are slow adopters to new technology. This is especially true when it comes to changes in how they run their businesses, so this additional income could definitely come in handy.
Kolayik could face challenges moving ahead as other companies move into their market. As noted above, Logo is one of the biggest players in the country. While their service is now offered as a localized software, they may look to develop cloud-based solutions as the eHR program inches closer to implementation. As the more recognizable company, this could hurt Kolayik’s future growth.
Putting those challenges aside, Kolayik appears to have solid technology and a long-term strategy in place, making this a great startup to follow as they continue to develop and grow.