Not all technology is sexy. In fact, most enterprise-level technology and software are not. What they lack in sex appeal, they gain in the ability to turn a healthy profit. These B2B technologies are a sweet spot, providing solid growth and profitability in ways that most traction-seeking consumer technologies can only dream about.
Enterprise technologies in the travel space are especially lucrative, given the legacy systems and large transaction volume.
A new company called Blackspark has released a product aimed squarely at the payroll tax compliance segment of the corporate travel market.
The borderFile software helps companies track the global movements of employees in order to identify where taxes will be due for days worked, and what compliance considerations should be addressed.
Chief Technology Officer Charles Baptiste:
We recognized a ‘technology gap’ in the ability for companies to track their business travelers for payroll and tax compliance.
The methods that companies are using are manual and cumbersome and therefore costly. Because of this, many companies are not taking adequate measures to comply with the requirements of international and domestic tax authorities, leaving them financially exposed to penalties.
The company has 3 employees, and has been completely self-funded. Based on data published by the National Business Travel Association, the company estimates that there are currently 50 million business travelers globally. This equates to a 5 billion dollar market for payroll and tax compliance products and services.
With a company-identified compound annual growth rate of 5%, this market opportunity is indeed very real. And beyond simplifying the tax/compliance process for multi-national companies, the upside on the risk reduction means potential cost savings for the legal department as well.
Q&A with Charles Baptiste, Blackspark's Chief Technology Officer.
Describe what your start-up does, what problem it solves (differently to what is already out there) and for whom?
We have taken a technology-centric approach to solving the problem of business traveler tracking for payroll and tax compliance.
Currently, the problem can be broken down into 2 areas: First, you need an automated, efficient and accurate way to take in and process large amounts of travel data on behalf of all the business travelers within a company.
Secondly, you need to be able to translate that data and organize it into the proper context to assist in meeting compliance requirements. We are the first solution focused on the ability to process travel data regardless of the source (i.e. TMC, open booking) and make the corresponding analysis and reports available for easy consumption by key stakeholders within the customer organization.
Why should people or companies use your startup?
Companies should use our solution because we save them money by:
- Automating costly manual processes
- Aiding compliance and avoiding financial penalties
- Allowing them to leverage their existing investments in travel relationships and technology
Other than going viral and receiving mountains of positive PR, what is the strategy for raising awareness and getting customers/users?We are very focused on educating the marketplace about the availability of technology to solve these issues.
The recent availability of APIs and integration options for itinerary parsing technologies (such as TripIt) and expense management systems (such as Concur) mean that our borderFile solution can effortlessly handle large, complex travel infrastructures at companies who may otherwise feel that the challenge is insurmountable.
We host periodic webinars to keep customers and partners informed of our progress. Also, we have launched the Global Mobility Technology discussion group on LinkedIn as a forum for stakeholders to share ideas and wish lists for new products and features.
We also reach out to industry experts, such as Scott Gillespie, to solicit feedback and help in spreading awareness. Finally, we attend and exhibit at trade shows, the next of which being Concur Fusion 2013 in April.
How did your initial idea evolve? Were there changes/any pivots along the way? What other options have you considered for the business if the original vision fails?
Our initial ideas were in the expatriate management space. However, talking with key industry personnel and prospective customers, we learned that short term business travel was a growing trend and that companies had a more pressing need to manage issues surrounding these employees.
If the original vision fails, we will evaluate other ways to deploy our considerable intellectual property in the broader travel industry.
Where do you see yourselves in 3 years time, what specific challenges do you hope to have overcome?
In 3 years time, we hope to have done an adequate job educating the market about the role that technology can fill in solving these issues. We hope that the market will see us as a leader in this space and reward our efforts with market share.
Beyond market education, an additional challenge lies in navigating the ongoing actions of domestic and worldwide governments, specifically their business travel legislation. At the moment, the trend is that governments are becoming more strict about payroll and tax compliance, which is to our company’s benefit. Should this environment reverse course to a more lenient approach, that will pose an additional challenge for us.
What is wrong with the travel, tourism and hospitality industry that requires another startup to help it out?
The existing industry does not have enough solutions for consolidating travel data from many disparate sources, standardizing it and then providing the ability to overlay sophisticated business logic.
Without this, there is no way to easily compute the metrics required to assess various types of compliance risk for the corporation.
Our customers and prospects frequently tell us that they have tried to get these capabilities from their TMC, but were unsuccessful. At best, they could get a large dump of data that required excessive man-hours to comb through manually, looking for the relevant travel records.
In addition to this being cumbersome, it is also an error-prone approach that does not scale to large organizations with thousands of business travelers. We offer technology that solves these problems, using the data from the travel vendors that customers already have in place.
Tnooz take:
Enterprise clients can be a serious profit center for startups, and is an area poised for growth - especially when considering consumer-facing technologies. Of course, landing new corporate clients takes time as the sales cycle is generally much longer and involved many decision makers.
Despite these inherent challenges in the space, borderFile has a clear value for managers looking to minimize tax and payroll risk with employees working in countries all over the world. Rather than using a complex Excel spreadsheet, the software allows managers to easily track days worked in other countries and ensure that no potential compliance issues are overlooked.
The savings could really add up when looking at the legal side of things - labor and tax disputes involving local lawyers and experts in a foreign country can really cost a company time and money.
There's also the issue of changing labor and tax laws in foreign countries - simply keeping up with these changes is an enormous drain on resources.
We're curious to hear from more businesses who have used this software (one case study provided by the company here), especially in regards to reliability, ease-of-use and actual savings.
Snap poll:
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